- Bitcoin funding rates remain highly elevated compared to historical averages, indicating potential for another price dump
- Large retail profit-taking has been observed, which could signal a local top
- Bitcoin’s Spent Output Profit Ratio (SOPR) for short-term holders reached extreme greed levels in March, before retreating to a more neutral position
Bitcoin‘s price may be due for another correction despite a strong recovery from its weekend dump to $61,000, according to analysts at CryptoQuant.
Bitcoin Funding Rates Remain Elevated
Bitcoin funding rates are still highly elevated compared to historical averages, and large retail profit taking could indicate a local top.
The price is in a defined channel with around 20% expansion/retraction, an ideal scenario for large players to set up large positions, wrote GAAH.
The last time Bitcoin funding rates were in an equally significant bearish position was in late 2021, when Bitcoin’s price was just 25% of what it is today. Since then, the asset has experienced multiple brief corrections of roughly 20% though it hasn’t seen a funding premium like today.
Retail Investors Taking Profits
The asset’s rapid rise has incentivized many retail investors to start taking profits. The Spent Output Profit Ratio (SOPR) for short-term holders reached levels of extreme greed in March and has only now retreated towards a more neutral position.
Historically, when there are large retail profit-taking moves, it means a potential top is in the making, the analyst added. After the rapid fall in prices over the last two days, there has been a significant outflow of realizations by these holders.
How to Spot the Next Bottom
Lead Glassnode analyst James Check commented on the same metric on Sunday, claiming its latest break back below a 1.0 ratio is a healthy sign for bulls. He said short-term holders are disproportionately at a loss compared to long-term holders, and that the market must shake out its weak hands before moving higher.
SOPR is a metric that benefits contrarians, he advised. Watch the retest of 1.0, it needs to break above not find resistance.
Bitcoin’s crash over the weekend triggered $700 million in liquidations within 24 hours. Many suspect it was sparked by escalating geopolitical tensions between Iran and Israel.
Conclusion
Bitcoin’s price remains in a precarious position according to multiple on-chain metrics. While its weekend correction may mark the start of a deeper pullback, analysts advise watching key indicators like funding rates and SOPR for signs of the next bottom. Patience will be key in navigating the turbulent waters ahead.
