Shakeout Or Top? Here’s What Bitcoin SOPR Says About It
19 Novembre 2021 - 8:00PM
NEWSBTC
Bitcoin price has now declined to $56k; does that mean a top is in?
Or is this just a shakeout? Here’s what the SOPR indicator says
about it. The Bitcoin SOPR Indicator The BTC Spent Output Profit
Ratio (or SOPR in short) is an on-chain indicator that estimates
whether investors are selling at a profit or a loss. When the
metric’s value is above one, it means coins that were moved during
the period were sold, on an average, at a profit. While SOPR values
less than one imply the overall market has been selling at a loss
during the particular timescale. If the indicator starts trending
up, it could mean holders are now realizing their profits and a
correction could soon be coming. On the other hand, a downwards
trend implies sellers are moving their coins at a loss, and holders
with profitable coins may be sitting on to them in hopes of further
price appreciation. Related Reading | Bitcoin MVRV Shows Top
Isn’t In Yet, BTC Still Has Room To Grow What Does The Indicator
Tell Us About Tops And Shakeouts? An analyst has created a chart in
a CryptoQuant post that highlights the trend in the value of the
indictor over the past year and a half. The trend of the SOPR
during the early 2021 run versus now | Source: CryptoQuant As you
can see, above are the graphs for a few different versions of the
indicator. The STH SOPR and LTH SOPR metrics show whether
short-term and long-term holders, respectively, are taking profits
or not. The separation between the two types of holders is done on
the basis of coin age. Coins that haven’t been moved since 155 days
fall into the LTH category. Anything below that is in the STH
territory. Now, looking at the above chart, it seems like all the
Bitcoin SOPR metrics had high values when the early 2021 top
formed. Related Reading | Inflation fears sparks Bitcoin rally
before Taproot – Crypto Roundup, Nov 15, 2021 But before the run
started, there was a period where the STH SOPR shot up and the
other indicators also increased in value. However, there was no top
formation here as it was only a pre-bull run shakeout. A trend
similar to that seems to be visible in the current time period. The
STH SOPR is high right now, but long-term holders don’t seem to be
realizing that much profits. This fact makes the analyst believe
that the latest decline in Bitcoin’s price was possibly just a
shakeout, and not a top formation. Here is a chart that shows the
current trend in BTC’s price: BTC's price continues to plunge down
| Source: BTCUSD on TradingView Featured image from Unsplash.com,
charts from TradingView.com, CryptoQuant.com
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