Key Points
- Bitcoin’s price surged to over $64K following the U.S. Federal Reserve’s rate cut.
- Despite bullish signs, some analysts caution a possible price reversal ahead.
Bitcoin recently experienced a surge in value, reaching over $64,000. This increase, amounting to a 2.8% rise within 24 hours, followed the U.S. Federal Reserve’s decision to cut rates. This decision has sparked positive sentiment across various risk assets, including Bitcoin.
Potential Reversal on the Horizon?
Despite the recent price increase, some analysts are cautiously analyzing Bitcoin’s fundamentals to determine the sustainability of this rally. A CryptoQuant analyst, known as ‘Darkfost,’ pointed out a potential red flag using the Stock-to-Flow (S2F) reversion chart, which is often used to predict Bitcoin’s price movements.
According to Darkfost, the S2F ratio is currently in a green zone, suggesting a buying opportunity. However, the last two times this occurred, a significant pullback followed. This raises questions about whether the current rally will continue or if another retracement is imminent.
Bitcoin’s Fundamentals Showing Strength
Despite potential reversal concerns, Bitcoin’s fundamentals exhibit signs of strength that could support further upward movement. One key metric is the recovery of Bitcoin’s active addresses, an indicator of retail interest. Recently, this figure has risen to over 700,000, suggesting increased user engagement.
Another important metric is Bitcoin’s Spent Output Profit Ratio (SOPR), which measures whether investors are selling their Bitcoin at a profit or a loss. Currently, Bitcoin’s SOPR is at 1.01, up from 0.994 in late August, indicating that more investors are realizing profits on their Bitcoin holdings, signaling a healthier market sentiment.
