TechFlow news, January 10 — Cryptocurrency analyst Avocado_onchain posted that Bitcoin's recent price decline has made market sentiment increasingly negative. This downturn is driven by uncertainty surrounding Federal Reserve rate cuts, investor caution ahead of President Trump's inauguration, and news that Bitcoin from the U.S. Silk Road case is permitted to be sold, further intensifying bearish sentiment. To assess the possibility of further correction, I analyzed several on-chain data points in comparison with historical patterns:
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The Buy/Sell Ratio (30-day moving average) shows seller dominance. After Bitcoin surged sharply in March 2024, an overheated market caused this ratio to drop below 1 as prices fell. Similarly, following Bitcoin’s all-time high, signs of market overheating have reappeared, and the declining trend in this ratio suggests further price drops may occur.
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Short-Term SOPR has fallen below 1, indicating short-term investors are selling at a loss. This mirrors the downward trend observed in March 2024, which led to an extended correction phase. The current decline in SOPR suggests more negative values ahead, potentially leading to a deeper correction.
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Funding Rates: Whenever the 30-day moving average of funding rates turns downward, funding rates tend to go negative before a rebound. Currently, the moving average is trending lower, suggesting negative funding rates could emerge soon, pushing market sentiment into fully bearish territory before any potential recovery.
While this analysis focuses on short-term price movements, in the long run, Bitcoin may rebound and resume its upward trend after completing the correction phase. Investors should maintain a strategic perspective, avoid reacting to short-term noise, and focus on the broader bullish trajectory.
