Bitcoin (BTC) finds itself trading under the $88,000 mark, a noticeable drop from its peak of $109,000 earlier in the year. Over the past month, the dominant cryptocurrency has experienced a roughly 15% decrease, with little apparent momentum for a bounce-back.
This bearish trend is worrying many investors, but CryptoQuant analyst Bilal Huseynov shared some insights on Bitcoin’s current situation, focusing on the Retail Investor Demand (RID) indicator.
Bilal Huseynov’s analysis zeroes in on the Retail Investor Demand metric. This tool, which tracks the interest and activity of retail investors in Bitcoin, can offer clues to potential price trends. The analyst notes that recently, this demand hit some resistance near the neutral zone of around 0%. Earlier attempts to break this level in February failed, leading to a decline in Bitcoin’s price to its present $88,000.
However, there are silver linings. Huseynov observes that demand is picking up again—a scenario that unfolded similarly in June 2021, where Bitcoin quickly recovered from a comparable slump. To tip towards a positive outlook, RID needs to climb above the 0% mark, signaling a potential change in market sentiment.
Huseynov further breaks down the RID indicator’s usefulness in long-term analysis into three levels: Negative (-15%) suggesting possible buying opportunities, Neutral (0%) indicating potential market shifts in either direction, and Positive (15%) which typically accompanies bullish markets. He pointed out an October 2024 surge that coincided with Bitcoin reaching an all-time high, while a late 2024 dip back to 0% heralded the start of a bearish phase. At present, RID finds itself at a pivotal point, and changes in retail demand could sway Bitcoin’s path in the coming months.
Meanwhile, short-term indicators are hinting at possible rebound opportunities. CryptoQuant analyst Yonsei Dent highlights another metric, the Spent Output Profit Ratio (SOPR) concerning Bitcoin’s short-term holders (STH). This metric assesses whether these holders are selling at a gain or a loss, and current levels indicate a state of overselling.
Dent suggests that applying Bollinger Bands to the STH-SOPR can highlight extreme deviations, with the latest data revealing patterns akin to past market bottoms. Historically, any substantial decline in STH-SOPR has been trailed by a short-term recovery between 8% and 42%, even within bear markets.
Given this historic backdrop, Bitcoin might be approaching a significant turning point. Should the past serve as a guide, a short-term price recovery could be imminent, presenting short-term traders with potential opportunities.
