The recent retracement of Bitcoin [BTC] has not exactly been a bad omen for the king coin, according to pseudonymous on-chain analyst onchained.
The analyst, who wrote about Bitcoin’s market sentiment and impact on holders on CryptoQuant, noted that the decline has left the 1-3 months UTXOs in a favorable position.
Existing opportunities irrespective of the decline
Onchained came to this conclusion because the 1–3 month UTXO holdings are only a little below the average acquisition price. Typically, this is a sign of minimal unrealized losses. Thus, a possible move toward breakeven levels could instill more confidence in the market.
To arrive at this conclusion, the analyst made use of the Market Value to Realized Value (MVRV). This is done by taking the supply held by the UTXOs on the 1-3 month frame and dividing it by the MVRV.
The MVRV is a function of the division between the total market cap and the realized market cap. The result of this metric gives an idea if Bitcoin is at a fair value, undervalued, or overvalued.
According to onchained, Bitcoin’s MVRV was above 1 at the time of the analysis, meaning the coin has more tendency to rise in the upward direction than to fall.
He further noted that,
“In our current scenario, the MVRV for the swing trader cohort has recently crossed the 1 level to the upside, which can be interpreted as a bullish sign, possibly indicating an opportunity for taking a gradual long position or reinforcing an existing one.”
BTC to $32,000, who says no?
Around the same time onchained published his analysis, research analyst Alex Adler Jr. posted on X (formerly Twitter). According to Adler, there has been an increase in the number of Bitcoin’s long positions.
Adler, in his post, also considered the state of the Taker Orders. The Taker Orders measure both the bid and ask positions taken by traders in the derivatives market.
According to the analyst, the cumulative 8-hour delta of Taker Orders was positive. This data reinforced the notion that market sentiment was bullish.
Also, Coinglass revealed that Open Interest in BTC Futures within the last 24 hours has increased. As an indicator to determine price strength, Open Interest is the total number of contracts held by market participants.
When Open Interest increases, it implies an increase in liquidity. When it decreases, it means a surge in the closing of contracts initially held. While the former was the case, it was also interesting to observe that traders were targeting as high as $32,000.