Bitcoin (BTC) fell 11% from January 7 to 9, breaking the $92,000 level for the first time in nine days.
This decline led to the liquidation of over $257.5 million in leveraged long positions during the same period and coincided with profit taking, strong economic data and uncertainty surrounding the inauguration of US President-elect Donald Trump.
Despite this short-term bearish momentum, three data indicators suggest that a decline to $92,000 may have marked a local bottom for BTC, providing a good entry point for investors.
SOPR decline hints at Bitcoin price bottom
On-chain data shows that Bitcoin’s Spent Output Return (SOPR) fell to 0.98 on January 10, suggesting that short-term holders (STHs), investors who have held Bitcoin for less than 155 days, are selling at a loss. .
CryptoQuant, a market intelligence firm, said in a Jan. 9 post on
“In the last 24 hours, 36.4k Bitcoins were transferred from short-term holders to exchanges, sending the SOPR (Spend-to-Revenue Ratio) below 1.”
Bitcoin SOPR. source: CryptoQuant
SOPR measures the profit or loss of spent Bitcoin output by comparing its value when the coin was last moved and its value when it is spent again.
Short-term SOPR focuses on coins moved within 6 months and can be used to indicate market sentiment. A value less than 1 could suggest a capitulation or market bottom, potentially signaling a good time to buy.
This scenario often precedes price recovery and represents a potential buying opportunity. On August 5, 2024, after Bitcoin fell to $49,577, SOPR fell to 0.90, and three weeks later the price recovered 31% to $65,103.
Most recently, BTC rose 62% between November 5 and December 17, 2024, toward an all-time high of over $108,000 before the SOPR ratio fell below 1 on November 4.
Therefore, some investors saw the decline to $92,000 as a buying opportunity and interpreted the price movement as an exodus of bears rather than a new bear cycle.
“Plus some BTC spot at $92.8,000 here is disappointing price action, but we need to buy into this key support area,” added Bitcoin investor Sean Buckley.
“Bitcoin’s $92,000 range will be an area where it will bounce strongly if we bounce back.”
BTC entity reconciliation dormant flow flashes green.
Another indicator that can be used to determine whether the Bitcoin market has bottomed is Corporate Adjusted Dormant Flow, which represents the ratio of BTC’s current market capitalization to its annual dormant value (measured in US dollars).
Historically, when the indicator falls below 250,000 (red circle), it represents a “good historical buying zone” and often signals the end of a price correction or before a significant price recovery.
Bitcoin entity reconciliation dormant flow. source: glass node
The index reached its lowest point from 260,278 on December 16 to 210,000 on January 9.
Historically, breaking the 250,000 mark following a previous decline coincided with the start of a significant uptrend. One example is when Bitcoin bottomed in July 2021 and the indicator entered the green zone, starting a new bull market. Bitcoin hit an all-time high of $69,000 on November 10th.
relevant: Bitcoin speculators panic sell at $92,000 during ‘good time to accumulate’
If the indicator sends bullish signals again, the price could recover from recent lows around $92,000 and make a huge move towards all-time highs.
Bitcoin’s long-term supply distribution has reached its peak.
Additionally, the percentage of Bitcoin supply held by long-term holders (LTH) has reached its lowest level since December 6, 2024. This means that the distribution by LTH occurred in the last month, which was probably driven by profit-taking as Bitcoin went live for everyone. -Time high above $108,000.
Now that the distribution rate by LTH has slowed, the 30-day percent change in LTH supply suggests that the distribution rate may have peaked and reached the extremes seen in previous cycles, Glassnode says.
source: glass node
The decline in the LTH supply distribution ratio suggests that the market is transitioning from a distribution phase, historically consistent with market bottoms, to an accumulation phase.
The January 10 issue explains this phenomenon. X In the post, Glassnode said:
“In past cycles, prices continued to rise even after LTH distribution peaked. This infers that the peak of the distribution does not always coincide with the immediate macroscopic peak.”
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.