Bitcoin’s Value Fluctuations: CPI Gives Hope, US Selloff Rumors Cause Backlash

• Bitcoin sees promising gains as CPI index favors cryptocurrencies.
• Short-term holders face challenges amid Bitcoin’s ongoing volatility.

Amidst the rollercoaster ride of Bitcoin’s value, the Consumer Price Index (CPI) appeared to be smiling on it and certain other cryptocurrencies, leading to some promising gains.

However, this hopeful trend was quickly interrupted by a widespread rumor that the US was selling out of Bitcoin, partially eroding the acquired gains.

Given the ongoing volatility experienced by Bitcoin, individuals holding their investments in the short term found themselves in a precarious situation, potentially facing some challenges going forward.

Read Bitcoin (BTC) Price Prediction 2023-24

Bitcoin SOPR is falling

March 18 marked the peak of the latest Bitcoin SOPR (Spent Output Profit Ratio) index, reaching an impressive 1.07. The index remained consistently high throughout the ensuing period, suggesting that short-term investors who held their coins for less than six months enjoyed remarkable profitability on average.

The short-term SOPR calculation focused on coins held for durations from one hour to less than 155 days. It provided insight into the profitability of trading among investors who previously held their coins.

Source: CryptoQuant

However, the current state revealed a different picture. As of this writing, the short-term SOPR index has dipped below the critical threshold of 1, settling at 0.99 per CryptoQuant data.

This decline meant a shift in Bitcoin’s price, accompanied by short-term investors realizing their profits. Consequently, what was once an average profit or neutral position had transformed into actual losses for these investors.

Bitcoin cost base means little breathing room

Despite the recent decline in the price of Bitcoin, data from Glass node offered some comfort to short-term holders. The cost basis showed an encouraging trend in the short-term realized price, which continued to climb upwards.

The chart showed a significant overpricing of the Short-Term Holder Cost Basis over the past few months. It also showed the average acquisition price for short-term owners approaching the current spot price.

The short-term realized price of Bitcoin serves as a metric to measure the average purchase price of Bitcoin that has recently been sold or transferred within a short time frame.

It shows the average profit or loss of coins held for a relatively short duration. When the short-term realized price of Bitcoin is on the rise, it means that recent buyers are selling their coins at a profit. This upward trend may indicate a bullish market or profit realization by traders who have made recent investments.

Slight BTC overestimation on the MVRV ratio

According to the Bitcoin 90-Day Market Value to Realized Value (MVRV) ratio provided by Santiment, BTC still showed a slight overvaluation.

The calculation indicated that BTC remained above the zero line, hovering around 1.4% from the current update. This suggested that despite the prevailing downward trend, the owners in this period still retained their positions with a modest profit.

Source: Sentiment

How much is 1,10,100 BTC worth today?

While BTC has faced challenges recently, short-term holders have not found themselves in an entirely unfavorable situation. With a small price increase, their profitability would improve further.