Bitcoin Could Decline Further Before A Rebound, Here’s Why
September 07 2023 - 9:09AM
NEWSBTC
The pattern of an on-chain metric may suggest that Bitcoin could
see more downside ahead before a rebound is found. Bitcoin STH SOPR
Hasn’t Hit The Bottom Zone Yet An analyst in a CryptoQuant
Quicktake post explained that the BTC short-term holders are
selling at a loss. The relevant indicator here is the “Spent Output
Profit Ratio (SOPR),” which tells us whether the Bitcoin holders
are selling their coins at a profit or a loss. When the value of
this indicator is greater than 1, it means that the average holder
in the market is moving their coins at a profit. On the other hand,
values below this threshold imply that loss-taking is the dominant
force in the sector. The SOPR being exactly equal to one naturally
suggests that the market is just breaking even on its selling right
now as the total amount of realized profits cancel out the losses.
Related Reading: Bitcoin MVRV At Critical Support Line, Will Retest
Be Successful? The SOPR can also be defined for just a part of the
market. In the context of the current discussion, the short-term
holder (STH) group is of interest. These investors have been
holding onto their coins since less than 155 days ago. Now, here is
a chart that shows the trend in the 30-day moving average (MA)
Bitcoin SOPR over the past several years: Looks like the 30-day MA
value of the metric has been going down in recent days | Source:
CryptoQuant As displayed in the above graph, the 30-day MA Bitcoin
STH SOPR had been above one for most of the year 2023, but
following the recent struggle in the asset’s price, the indicator
has dipped below this mark. Historically, the one indicator level
has been a line of support for the cryptocurrency, as it has often
found rebounds. For example, Bitcoin found bottoms at this mark
during the slumps in both March and June. With the recent drawdown,
though, this support level has been breached, as the STHs are now
selling their coins at a loss. Usually, whenever the metric dips
below this level, it doesn’t come back above it quickly, as the
line begins to act as resistance instead. The Bitcoin STH SOPR has
historically been able to find rebounds in the green box that the
quant has highlighted in the chart. The indicator is still a
notable distance above this bottoming zone. Related Reading:
Bitcoin HODLer Dominance Rises To Record Levels, Bullish Sign? If
the BTC price will only find its rebound when the indicator dips
inside this zone, then more decline could be ahead for the asset so
that the STHs are pushed into capitulating at a deeper degree. BTC
Price In The Short Term Bitcoin has continued its sideways struggle
recently as the cryptocurrency has been unable to find a break in
either direction. The asset’s price is floating around the $25,700
mark. BTC continues to show stagnation | Source: BTCUSD on
TradingView Featured image from Maxim Hopman on Unsplash.com,
charts from TradingView.com, CryptoQuant.com
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