In a recent -8% plunge in BTC, panic typically ensues among novice investors. However, with the pending decision on a BTC Spot ETF in January, the market demand for Bitcoin remains fundamentally strong.
To assess whether BTC an overheating zone, two crucial indicators are analyzed:
Short-Term Investor Inflows: By examining the Realized Cap - UTXO Age Bands (%), 1D to 1W cohort, a historical correction is often seen when the numbers hit 8%. Currently, the 'Short Term SOPR' metric stands at 5.65%, suggesting an increase in inflows from new investors but not indicating overheating.
Funding Rate in Futures Market: Traditionally, a BTC of 0.05% signals an overheated market. Presently, it sits at 0.02%, indicating the futures market is not overheating.
Considering both indicators, it's suggested that the market is not yet overheated, and a rebound is probable post-correction. The 'Short-Term SPOR' indicator becomes crucial in this context, signaling a good time to buy when short-term investors are selling BTC this indicator falls below 1, an aggressive long view is recommended.
