Bitcoin SOPR Suggests Market Nowhere Near The Bottom


According to the chain data, the current Bitcoin SOPR trend indicates that the market may not be near the bottom of the price.

Bitcoin SOPR Still Above “One” Level

As pointed out by an analyst at CryptoQuant mailBTC SOPR hints that there may be some way forward before a bottom is formed.

The “Profit ratio of the output spent“(or SOPR for short) is an indicator that tells us whether investors are selling at a profit or at a loss at the moment.

The scale works by evaluating the history of each coin in the chain to see what price it was last moved at. If this price is lower than the current price (i.e. the sale price), the currency is sold at a profit.

On the other hand, the last price in excess of the current price implies the investor I realized the loss on this coin.

Related reading | On-chain data: Bitcoin whales buy dip as BTC drops to $39,000

When SOPR has a value of more than one, it means that the market as a whole is currently making a profit. While the ratio values ​​below the threshold indicate the realization of losses.

Now, here is a chart showing the trend in Bitcoin SOPR over the past few years:

Bitcoin SOPR

Looks like the indicator's value is above 1 right now | Source: CryptoQuant

In the chart above, quantum identifies important trend points. Historically bottoms appear to have formed when Bitcoin’s SOPR drops below value = 1 tick.

The significance of this “first” level is that investors have just broken the break even point at this point. The value drops further and they sell at a loss.

related to reading | TA: Bitcoin Recovers Its Losses But Here’s Why $41.5K Can Block Gains

After giving up, there are not many sellers left in the market naturally, which is why a bottom is formed during these periods.

Now, looking at the current trend, it appears that the value of Bitcoin SOPR is around 1.31 at the moment. This is still a bit above level 1, which may indicate that there may be more downsides in store for cryptocurrencies before a new bottom is formed.

However, it is also possible for the price to see a temporary rebound here, as it actually happened once earlier in the year around a similar SOPR value.

BTC price

At the time of writing this report, Bitcoin price It is floating around $40.7K, up 1% in the past seven days. Over the past month, the cryptocurrency has lost 3% of its value.

The chart below shows the currency price trend over the past five days.

Bitcoin price chart

BTC's price looks to have surged up over the past twenty-four hours | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com



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