On chain data shows that Bitcoin indicators are currently being retested at a critical level, which may determine the direction of the market from here.Bitcoin short-term holder SOPR has dropped to 1As an analyst pointed out in a CryptoQuant post, short-term holders are currently selling at breakeven points
On chain data shows that Bitcoin indicators are currently being retested at a critical level, which may determine the direction of the market from here.
Bitcoin short-term holder SOPR has dropped to 1
As an analyst pointed out in a CryptoQuant post, short-term holders are currently selling at breakeven points. The relevant indicator here is the "Expenditure Output Profit Ratio" (SOPR), which tells us whether Bitcoin investors are transferring their tokens in a profit or loss situation.
When the value of this indicator is greater than 1, it means that the average holders in the market are currently selling their tokens for profit. On the other hand, a value below this threshold indicates that the entire market is achieving net losses.
The level where SOPR is exactly equal to 1 means that the current realization of losses is exactly equal to the realization of profits. Therefore, the investment of ordinary investors has just reached breakeven.
In the context of the current theme, there is no interest in the entire market; Only a portion: 'Short Term Holders' (STH). STH includes all BTC investors who have purchased their Bitcoin within the past 155 days.
Now, this is a K-line chart that shows the trend of Bitcoin SOPR over the past few years, specifically targeting these STH's 14 day moving average (MA):
The value of this indicator seems to have been declining in recent days | Source: CryptoQuant
From a historical perspective, Bitcoin STHSOPR has always followed a strange pattern. During bullish periods, this indicator usually remains above the line where the indicator value becomes 1. This makes sense because the rebound provides many profit taking opportunities for STH, so most people should sell when they make a profit.
However, what is truly interesting is that whenever the indicator drops to the 1 line, it provides support for prices (and also causes the indicator to rebound above it). The examples in this regard are marked with green arrows in the figure.
As mentioned earlier, the 1 line indicates that the average STH has just reached the level of breakeven, which means they are selling at the price they receive coins, which is their cost basis.
The reason why this level serves as support in the bullish trend is that investors view their cost base as a profitable purchasing opportunity (because they believe prices will rise in the near future). Therefore, a large number of purchases occur here.
In a bear market, opposite behavior occurs; This level serves as a resistance to price, as selling often occurs at this level. Due to this pattern, the behavior of indicators at level 1 can provide hints about whether the current bullish or bearish mechanism is active.
Recently, this indicator has once again fallen to this critical level. If the rise of Bitcoin continues now, then Bitcoin STHSOPR should rebound here. This has already happened once in this rebound, as prices felt supported at this level in March.
However, if retesting ultimately fails, it may mean that cryptocurrencies may have transitioned back into a bearish period.
Bitcoin Price
At the time of writing, the trading price of Bitcoin was approximately $27000, down 2% last week.
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