Bitcoin’s On-Chain Metric Suggests More Downside Before Rebound
The possibility of further decline followed by a rebound in Bitcoin can be inferred from a specific on-chain metric.
Bitcoin’s SOPR Indicates Short-Term Holders are Selling at a Loss
An analyst explained that BTC’s short-term holders are currently selling their coins at a loss, as indicated by the Spent Output Profit Ratio (SOPR).
When the SOPR value is above 1, it signifies that the average holder is selling at a profit. Conversely, values below this threshold indicate that most holders are selling at a loss.
When the SOPR is exactly 1, it suggests that the market is breaking even as the total realized profits offset the losses.
The SOPR can also be measured specifically for short-term holders (STH) who have held their coins for less than 155 days.
Bitcoin’s SOPR Breaks Support Level, More Decline Possible
Historically, the 30-day moving average of Bitcoin’s SOPR has found support at a certain level, leading to rebounds. However, the recent drawdown has breached this support level, indicating that STHs are currently selling their coins at a loss.
Typically, when the SOPR dips below this level, it takes time for it to rise above it again, as the level begins to act as resistance.
The current SOPR is still significantly above the bottoming zone where rebounds have previously occurred, suggesting that more decline may be necessary for STHs to capitulate at a greater extent.
Short-Term Outlook for BTC Price
Bitcoin has been experiencing a period of sideways movement, struggling to break in either direction. As of now, the price hovers around $25,700.
Hot Take: Further Decline Expected Before Bitcoin Rebounds
Based on the analysis of the SOPR and the current price movement, it is likely that Bitcoin will face more downside before finding a rebound. This is supported by the selling behavior of short-term holders, indicating a need for deeper capitulation. However, as with any market prediction, uncertainty remains.
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