Currently, Bitcoin (BTC) is trading just below $88,000, representing a considerable decrease from its all-time peak of $109,000 reached earlier this year. In the last month, this dominant cryptocurrency has experienced a consistent decline of nearly 15%, displaying minimal signs of a reversal.
This bearish trend has raised concerns among investors; however, CryptoQuant analyst BilalHuseynov recently provided his insights into Bitcoin’s situation using the Retail Investor Demand (RID) indicator.
Bitcoin Retail Investor Demand at a Turning Point
BilalHuseynov’s assessment concentrated on Retail Investor Demand (RID), a metric that assesses retail interest and activity within Bitcoin, which can often indicate possible price movements.
According to the analyst, retail investor demand encountered resistance recently near the neutral threshold of around 0%. In mid-February, the RID indicator attempted to breach this level but fell short, leading to Bitcoin’s decline to the present $88,000 mark.
Despite this setback, there are encouraging signs. The analyst pointed out that RID has started to pick up momentum once again, similar to the pattern observed in June 2021, when Bitcoin experienced a rapid recovery after a comparable decline.
For this metric to genuinely indicate a positive change, it would need to surpass the 0% neutral area, reflecting a possible shift in market sentiment. BilalHuseynov further elaborates on how the RID indicator can aid in long-term analysis, identifying three critical levels:
• Negative (-15%): A strong signal to watch for buying opportunities.
• Neutral (0%): An indication that the market may be gearing up for movements in either direction.
• Positive (15%): Suggests that Bitcoin’s price has entered a “premium area,” commonly observed during bullish markets.
The analyst referenced an instance where, in October 2024, a surge above the 0% neutral zone corresponded with Bitcoin reaching its all-time high.
Conversely, a dip back to 0% in late 2024 marked the beginning of a bearish trend. At present, the RID is at a pivotal point, and a change in retail demand could significantly impact Bitcoin’s trajectory in the following months.
Short-Term Indicators Suggest Promising Rebound Opportunities
Additionally, other analysts are identifying short-term buying opportunities based on varying metrics. Yonsei Dent, another CryptoQuant analyst, highlighted the Spent Output Profit Ratio (SOPR) concerning Bitcoin’s short-term holders (STH).
This metric assesses whether short-term holders are selling at a profit or a loss, and has recently declined to levels that have historically signified oversold conditions.
Dent mentioned that applying Bollinger Bands to the STH-SOPR helps identify extreme deviations, with current data demonstrating a pattern similar to past market bottoms.
Dent observed that significant downside deviations in the STH-SOPR have been followed by short-term rebounds ranging from +8% to as much as +42%, even amidst bearish market conditions.
Such historical context suggests that Bitcoin might be approaching a critical juncture. If the trend persists, a short-term price recovery could be imminent, presenting potential opportunities for short-term traders.
Featured image created with DALL-E, Chart from TradingView
