CryptoQuant.com
2 reasons for BTC's correction last week and why we could be cautiously optimistic about Bitcoin's outlook
Last week's correction in bitcoin price happened due to two factors. Firstly, short-term holders of bitcoin cashed out their profits as the profit ratio rose above 5%. This resulted in a decline in bitcoin's price as it had increased beyond the realized price of the 1m-3m age band, which usually indicates the price trend and short-term momentum. Secondly, some miners transferred their bitcoins to exchanges in early March. Despite the recent correction in bitcoin's price, it is important to note that on-chain data still suggests a cautiously optimistic outlook for four reasons. Firstly, the spending of large bitcoin holders, also known as "whales," has remained relatively low compared to other price corrections since late 2022. Previously, whales spent over 500k BTC a day during or before price corrections, but now they chiefly spend below 150K BTC in daily terms. Secondly, the holdings of bitcoin whales have increased to their highest level since November 30, 2022, as large BTC holders continue to add to their holdings. Thirdly, the Inter-exchange Flow Pulse (IFP) indicates the early stages of a bull market, with momentum turning positive again according to the indicator's positive 7-day % change. Lastly, the Bull/Bear Market Cycle Indicator remains in the bull territory, and the On-chain P&L Index momentum has entered more sustainable levels. Additionally, traders in the derivative markets hold positive sentiments and are willing to pay to open new long positions with a funding rate above zero.