On-Chain Data Uncovers Five Bitcoin Signals That Predict Market Moves

While news of Bitcoin’s price movements is front-page, serious investors should also pay attention to data from on-chain sources. Key Bitcoin indicators highlighting what is happening in the market are underlined by CryptoQuant.com.

A crucial detail to check is the realized price, which tells us the average price Bitcoin was traded at last. When the market is profitable because the price is above the entry level, support may be found at this stage. A price below this point shows that investments across the market are creating losses.

Another way of looking at the health of the market is through the spent output profit ratio, known as SOPR. The metric helps you see if investors are making a profit or a loss by selling Bitcoin on average. A SOPR above one indicates people are selling at a profit, but a reading below one indicates losses during selling.

Image 1- Bitcoin: Short Term Holder SOPR. Source: CryptoQuant NUPL is a metric used to measure the large-scale net unrealized Bitcoin profits or losses among every holder of Bitcoin. A lot of bullishness and greed tend to show up among investors with high values, but with low values, fear or capitulation is the typical sign.

Image 2- Bitcoin: Net Unrealized Profit/Loss(NUPL). Source: CryptoQuant Gaining a deeper understanding means checking the portion of bitcoin held by short-term traders against the keepers of long-term holdings. Accumulation by long-term investors usually shows stability, but higher supply among short-term investors tends to show more risk of distribution.

In addition, open interest in futures reflects the total value of capital used in derivatives trading. When more people open additional positions, it may result in the potential for unstable prices. It is common for open interest to go down rapidly when risk-conscious actions are present.

When used together, these metrics help individuals understand the ups and downs in Bitcoin, which is key for identifying risks and chances before they show up in the currency’s value.

Seasoned Bitcoin Holders Spark a Significant Spending Wave

Glassnode reports that the number of Bitcoins being spent by holders who have kept their coins for a year or more is rapidly rising. A large number of Bitcoins were moved by holders who had coins between 1 and 5 years, with this latest movement marking one of the biggest outflows we have seen.

Image 3- BTC: Spent Volume By Age.Source: Glassnode About two-thirds of all Bitcoin transaction volume comes from individuals who acquired coins between three to five years ago. The activity by this cohort marks a big change in the market since, as prices rise, many long-term holders are either selling off or adjusting what they own in their portfolios.

Even though they spent less, those with two to three or one to two years’ worth of investments also played a role in this boom. Many knowledgeable investors are taking action now, as they feel more secure in making gains or reducing risk in ever-changing markets.

When established holders up their purchases, it tends to be a main sign that the market is moving in a significant direction. Such behaviors usually happen just before important price changes, so the actions of this group are important for understanding future trends in the market.

Comparing the Current Cycle to Past Market Events

They are spending a lot of Bitcoin now, but previous levels show they have not yet reached their strongest spending days. Past results demonstrate that times of high spending are often linked to profitable and strong market periods.

As the cycle started, most of the biggest withdrawals were made by people with newly acquired coins. During maturity, outflows concentrate in the hands of investors who plan to keep their investments for the long run, suggesting the next phase will see gains distributed.

From this, it seems the market is in a state of adjustment, with knowledgeable investors adjusting their portfolios and getting ready for the following trend in prices.

The comparison also points out that longer-term holders help direct the way the market behaves. Many businesses in the market usually do what the top companies do, making their actions crucial to watch.