Bitcoin Bull Run Is Only Just Starting, According To This Metric
November 28 2023 - 10:00AM
NEWSBTC
On-chain data shows the Bitcoin SOPR hasn’t yet reached high levels
that have been associated with heated bull market phases in the
past. Bitcoin SOPR Has Only Seen Mildly Positive Values Recently In
a CryptoQuant Quicktake post, an analyst has explained how market
psychology has driven the BTC price during the past few years. The
on-chain indicator that best represents the Bitcoin trader
psychology according to the quant is the “Spent Output Profit
Ratio” (SOPR). The SOPR basically tells us about whether the BTC
investors are selling their coins (or more precisely, transferring
them on the blockchain) at a net amount of profit or loss. Related
Reading: Santiment Reveals Trigger Behind Bitcoin Rally: Will This
Signal Reignite? When the indicator has a value greater than 1, it
means that the average holder in the sector is selling their coins
at some profit right now. On the other hand, a value under this
threshold implies that loss-selling is dominant among the
participants. Naturally, when the SOPR has a value exactly equal to
1, the overall market can be assumed to be just breaking even on
their selling, as the number of profits being realized is exactly
canceling out the losses. Now, here is a chart that shows the trend
in the Bitcoin SOPR over the past few years: Looks like the value
of the metric has been slightly positive in recent weeks | Source:
CryptoQuant In the above graph, the analyst has marked the pattern
that the Bitcoin SOPR has followed in recent years. During the 2018
bear market, the BTC SOPR dropped to pretty low values below 1
following the November 2018 crash. Coinciding with these lows in
the metric, the price also found its bottom. In the 2022 bear
market, the BTC investors were keeping still in the red as they
participated in only a relatively low amount of loss selling until
the FTX crash occurred and the holders finally capitulated to a
significant degree. So far, it would appear that the low after the
FTX collapse was indeed the bottom for the current cycle, as BTC
has only gone and doubled in value since then. The pattern of this
bottom has also been consistent with the one of the 2018 bear
market. In between these two major bottoms, there was also a
large-scale capitulation event back in 2020, but this crash was
mostly an anomaly caused by the unexpected emergence of the
COVID-19 pandemic. From the chart, it’s visible that the trend
during rallies has generally been just the opposite: investors
start selling at large profits and once the profit-taking attains
extreme levels, the top is hit. Related Reading: Analyst Sets
$47,000 Target For Bitcoin If This Happens Earlier this year, the
BTC SOPR spiked to high levels around when BTC hit its local top in
April. Since then, though, the indicator has remained relatively
calm, with some mild profit-taking coming after the latest leg in
the rally. “There will be many corrections and declines in the
current market until it reaches the peak of the bull market, but
from a psychological perspective, there still seems to be enough
time left until the latter half of the bull market,” thinks the
quant. BTC Price Bitcoin had registered a decline below the $37,000
level during the past day, but the asset has pulled itself back up
since then as it’s just floating above the mark now. The price of
the asset appears to have seen some drawdown recently | Source:
BTCUSD on TradingView Featured image from Shutterstock.com, charts
from TradingView.com, CryptoQuant.com
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