Bitcoin: Will another sell-off shape BTC’s short-term trajectory?

• The hike in UTXO and whale ratio could force BTC’s price correction.
• Coins in losses were more than those in profit in the short term.

Bitcoin [BTC] could be at risk of another downtrend despite struggling to sustain mild price rises, according to on-chain analyst SimonaD. Often referred to as the bellwether of the cryptocurrency market, BTC experienced a series of price fluctuations in recent times. 

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The cryptocurrency’s price history has shown a pattern of sharp declines followed by impressive recoveries. But the possibility of another downward move raises important questions about the factors at play.

Ready for an imminent pullback

While this performance has left investors wondering about the coin’s next move, SimonaD opined that the Unspent Transaction Output (UTXO) could provide some insights. The UTXO refers to the amount of leftover cryptocurrency after a successful transaction.

And according to the analyst’s publication on CryptoQuant, Bitcoin UTXOs in profit had reached 79.53%. But considering history, a high UTXO may not necessarily be favorable for the price action. In explaining this, SimonaD wrote,

“Usually, a high percentage of UTXOs in profit it may suggest that we have a risk of sell-off in the next period. When it acted as resistance, we had a price pullback.”

Furthermore, the analyst opined that Bitcoin’s health could be threatened due to the current condition of the metric. But this, however, depends on the holders’ decision to sell or stick to their assets.

Source: CryptoQuant

Moving in losses

Apart from the aforementioned analyst, Phi Deltalytics, also explained why Bitcoin could be bearish in the short term. Unlike SimonaD, Phil used the exchange whale ratio to come to this conclusion.

The exchange whale ratio is the relative size of the top 10 inflow transactions to total inflows. When it’s below 85%, it signals a bull market. On the other hand, when the metric is above 85%, it indicates possible mass dumping.

From the chart shared by Phil, the exchange whale was at its peak. Therefore, there could be large market moves that force a price correction. 

Source: CryptoQuant

In another CryptoQuant publication, Phil doubled down on his initial bearish stance. This time, he used the adjusted Spent Output Profit Ratio (aSOPR). As a representation of the aggregate profit and loss, the aSOPR compares the profit ratio of the whole market participants. 

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Values of the aSOPR greater than 1 imply that coins have moved at a profit. When the metric is exactly 1, it suggests that prices are at a breakeven point. And lastly, an aSOPR less than 1 implies that the market is selling at a loss.

Source: CryptoQuant

At the time Phil published, the aSOPR was less than 1. Therefore, he concluded that,

“Recent sideway actions have officially turned both aSOPR and short-term SOPR to the below 1 territory. The market is not convinced of the bull side.”