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Bitcoin Price Correction: Leveraging On-Chain Metrics for Strategic Trading Opportunities

Bitcoin’s recent price correction has led to a notable observation in on-chain data metrics: the short-term SOPR (Spent Output Profit Ratio) is currently below 1. This indicates that short-term holders, those who have held Bitcoin for less than 6 months, are selling their holdings at a loss. Historically, this has served as a reliable indicator for opportune moments to buy Bitcoin during bull runs.

For more precise timing, it’s recommended to utilize the Funding Ratio from market data. Typically, during price drops, new retail traders tend to close their positions, going against the trend. This presents an opportunity for savvy investors.

When Bitcoin experiences a sudden decline of over 15% in an upward trend, futures market traders often become apprehensive about further drops and hastily place short position bets. However, whale investors seize this moment to aggressively buy spot positions, amplifying the losses of retail short positions and executing a short squeeze strategy.

In summary, a funding ratio value of -0.01% could signal an opportune moment to enter into trades.

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