4 On-Chain Metrics Indicate Potential Correction In Bitcoin, Ethereum Price
The U.S. Federal Reserve is expected to raise the fed funds rate by 25bps to 4.75%-5% during the FOMC meeting on Wednesday. It will be the second consecutive 25bps rate hike, pushing borrowing costs to new highs since 2007. Traders anticipate a further increase in Bitcoin and Ethereum prices due to the banking crisis.
Billionaires Elon Musk and Bill Ackman, economists, and investors believe the central bank should pause the monetary tightening to bring financial stability after the collapse of three US banks and the takeover of Credit Suisse. Investors must keep a close watch on new economic forecasts and dot plot possible further rate hikes this year.
On-Chain Data Indicating Potential Correction in Bitcoin Price
Bitcoin is in the early bull market cycle and the recent rally above $28,000 clearly proves it. Moreover, on-chain indicators such as CryptoQuant’s On-chain P&L Index and inter-exchange flows indicated a bullish Bitcoin narrative.
The Bitcoin Bull/Bear Market Cycle metric indicates a possibility of a price correction as it reaches near the Overheated Bull area. Thus, investors must exercise caution due to the sudden increase in Bitcoin price in a considerably short period.
The Bitcoin Short-Term Holders SOPR metric has jumped above 1.5. It indicates investors are booking profits at a remarkable profit margin of 7.6%. It is the highest since November 2021, when Bitcoin was trading at $64K. Typically, values over ‘1’ indicate more short-term investors are selling at a profit.
Bitcoin Exchange Inflow metric indicates a significant increase in Bitcoin inflows into crypto exchanges as the BTC price rallied above $28,000, reaching the highest levels in 2023. Generally, a high value indicates higher selling pressure in the spot exchange. Thus, a correction in Bitcoin price is expected.
The Bitcoin Miner to Exchange Flow metric shows that miners have been contributing to these inflows amid the banking crisis, especially after the shut down of crypto-friendly Silicon Valley Bank. The miner reserves have fallen again in March after selloff in January.
Bitcoin Exchange Inflow – Spent Output Value Bands (%) metric indicates massive whale activity. A considerable proportion (33%) of Bitcoin flowing into exchanges has been from whales. This suggests that whales have been dominating exchange inflows recently.
Ethereum Price Correction
Meanwhile, Ethereum Exchange Inflow indicates possible ETH price correction and other on-chain metrics remain mixed. ETH price is expected to witness selling pressure amid the Shanghai upgrade and Bitcoin downfall.
Some analysts predicted a move toward $2000 in the short-term, but will continue to face resistance near the psychological level.
Also Read: Bitcoin Price Set For $35,000 After US Fed Rate Hike Decision: Bloomberg
The post 4 On-Chain Metrics Indicate Potential Correction In Bitcoin, Ethereum Price appeared first on CoinGape.
