On-chain data shows that a Bitcoin indicator is currently close to a major retest that will decide where the coin will go next.
Critical metric for Bitcoin!
BTC SOPR for short-term holders is approaching the baseline, according to an analyst in a CryptoQuant post. The “Output Profit Ratio Spent” (SOPR) is a metric that shows whether Bitcoin investors are currently selling/moving their coins at a profit or a loss. When the value of this metric is greater than 1, it means that the average owner in the market is currently making some profit with their sales. On the other hand, values below this threshold indicate that loss-making is the dominant force in the market at the moment.
Naturally, the SOPR being exactly equal to 1 baseline means that the total amount of profit realized exactly cancels out the amount of losses because the market as a whole is neutral. This SOPR is for the entire Bitcoin market. However, in the context of the current discussion, the relevant version of the metric is for only one segment of the market. This also applies to “short-term holders” (STHs).
The STH group includes all traders who bought their coins less than 155 days ago. This group is usually the weaker hands of the market, which reacts easily to market fluctuations. Below is a chart showing the trend of the 90-day and 365-day moving averages (MAs) of Bitcoin STH SOPR over the past few years.
As you can see in the chart above, the 90-day MA (in yellow) of Bitcoin STH SOPR broke above the 1 baseline when the rally first started earlier this year.
Which model will BTC follow next? 2016 or 2019?
This breakout is something historically observed in all previous major rallies in cryptocurrency. So, this indicates a shift towards profit selling for investors. With the last leg in the Bitcoin rally breaking above the $30,000 mark, the indicator’s 365-day MA (highlighted in blue) also managed to break above this mark. While this is happening, the 90-day MA is actually heading down. It is now about to pass below the 365-day MA as it approaches the 1 baseline.
On the chart, the quantile marked two previous instances where a similar trend for the asset occurred. The metric apparently found support at the breakeven point when it retested the 90-day MA 1 mark after a similar structure took shape in 2016. This recovery allowed Bitcoin to continue. Also, it has finally turned into a bull market for the coin.
But in 2019, retesting of the 90-day MA STH SOPR failed. Also, the bearish trend has taken over the coin once again. However, after 160 days, the bullish sentiment returned and the rally took place. The current Bitcoin market stands at a similar point to these two historical events. It is possible that one of them follows the lead. We will watch which of these patterns the entity will exhibit this time.
cryptocoin.comAs you follow, BTC is struggling to maintain the 30 thousand dollar support. At the time of this writing, Bitcoin was trading around $30,300, down 1% last week.
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