Bitcoin Rebounds After Retesting Key Support Level
During the recent decline in Bitcoin’s price, the cryptocurrency dropped to a low of $60,600. However, this level seems to have acted as strong support, as Bitcoin has since rebounded sharply.
An analyst pointed out that during this period of low prices, the Adjusted Spent Output Profit Ratio (aSOPR) for Bitcoin reached a value of 1. The aSOPR is an on-chain indicator that measures whether Bitcoin investors are realizing a net profit or loss with their current selling.
This indicator looks at the price at which each coin was last moved before its current transfer. If the last price was higher than the current price, it indicates a loss, while a lower last price suggests profit-taking.
The aSOPR has been adjusted to exclude transactions that occur within an hour of the previous one, as these are considered noise and do not significantly impact the market.
Bitcoin aSOPR Trend Analysis
A chart depicting the trend in Bitcoin’s aSOPR over the past few years shows that it reached high levels when Bitcoin reached its all-time high above $73,000. This indicates that most transactions were profitable at that time.
However, as the price of Bitcoin declined, loss-taking became more prevalent and the aSOPR retreated towards the 1.0 level. When the aSOPR reaches 1.0, it suggests that the market is breaking even on its selling activities.
The analyst notes that major bottoms have historically formed when loss-taking dominates and panic selling occurs. The recent low in January serves as an example, as it coincided with a retest of the 1.0 level on the aSOPR chart.
Current Bitcoin Price
At the time of writing, Bitcoin is trading at around $67,000, representing a 5% increase over the past week.
(Chart: TradingView)
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