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Bitcoin’s value swings: CPI offers hope, U.S. divestment rumors cause setback

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Bitcoin soared on the CPI’s favorable winds, only to be jolted by rumors of U.S. divestment. Short-term holders now navigate uncertain waters, hoping for a profitable tide to turn.

Bitcoin's value swings: CPI offers hope, U.S. divestment rumors cause setback

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  • Bitcoin experiences promising gains as the CPI index favors cryptocurrencies.
  • Short-term holders face challenges amidst Bitcoin’s ongoing volatility.

Amidst the rollercoaster ride of Bitcoin’s value, the Consumer Price Index (CPI) appeared to smile upon it and certain other cryptocurrencies, ushering in some promising gains.

However, this hopeful trend was swiftly interrupted by a widespread rumor of the United States divesting itself of Bitcoin, partially eroding the acquired gains.

Given the ongoing volatility that Bitcoin was experiencing, individuals who held their investments in the short term found themselves in a precarious situation, potentially facing some challenges ahead.


Read Bitcoin (BTC) Price Prediction 2023-24


Bitcoin SOPR dips

18 March marked the pinnacle of the latest Bitcoin SOPR (Spent Output Profit Ratio) index, reaching an impressive 1.07. The index remained consistently high throughout the following period, suggesting that short-term investors holding their coins for less than six months were enjoying notable profitability on average.

The short-term SOPR metric focused on coins held for durations ranging from an hour to less than 155 days. It provided insights into the profitability of trading among investors who previously held their coins.

Bitcoin short-term SOPR

Source: CryptoQuant

However, the current state of affairs revealed a different picture. As of this writing, the short-term SOPR index has dipped below the critical threshold of 1, settling at 0.99 per CryptoQuant data.

This decline signified a shift in Bitcoin’s price, accompanied by short-term investors realizing their profits. Consequently, what was once an average profit or neutral position had transformed into actual losses for these investors.

Bitcoin Cost basis signifies little respite

Despite the recent dip in the price of Bitcoin, data from Glassnode offered some solace to short-term holders. The Cost basis metric revealed an encouraging trend in the short-term realized price, which continued to climb upward.

The chart showed a significant upward repricing of the Short-Term Holder Cost Basis over the past months. It also showed the average acquisition price of short-term holders approaching the current spot price.

The short-term realized price of Bitcoin serves as a metric to gauge the average purchase price of Bitcoin that has been recently sold or transferred within a brief timeframe.

It shows the average profit or loss of coins held for a relatively short duration. When the short-term realized price of Bitcoin is on the rise, it means recent buyers are selling their coins at a profit. This upward trend may suggest a bullish market or the realization of profits by traders who made recent investments.

Slight BTC overvaluation on the MVRV ratio

According to the Bitcoin 90-day Market Value to Realized Value (MVRV) ratio provided by Santiment, BTC was still exhibiting a slight overvaluation.

The metric indicated that BTC remained above the zero line, hovering around 1.4% as of the current update. This suggested that, despite the prevailing downtrend, holders during this period were still retaining their positions with a modest profit.

Bitcoin 90-day MVRV

Source: Santiment


How many are 1,10,100 BTCs worth today?


While BTC has faced challenges recently, short-term holders have not found themselves in a completely unfavorable situation. With a slight price increase, their profitability would further improve. 

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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