According to the facts from Glassnode, a reputable cryptocurrency data analytics company, there has been an important development in the bitcoin market.
Thus, Glassnode examines the SOPR (Spent Output Profit Ratio) – a measure of the total profit or loss of investors in the cryptocurrency market. How is the ratio calculated? We take the value of aggregate sales value for a particular cryptocurrency and divide it by the aggregate purchase value, obtaining a profit or loss ratio. A SOPR value above one implies that investors are selling a crypto-asset at a profit, and vice versa.
Interestingly, in the second half of January 2021, the decline in the index (1) coincided with the end of the bitcoin price correction phase (2). After pushing off from the up-trend line (5), the price went into rally, during which it reached the record high of 58 thousand dollars on February 21 (6).
So it turns out that the SOPR indicator helps indicate the end of the pullback? It’s quite possible if you think about the fact that a pullback (or a correction within an up-trend) is, figuratively speaking, a downgrade in an overheated market to “normal values”.
Then if the situation repeats, and the current decrease of SOPR indicator (3) will indicate the end of the correction, we will witness the beginning of a new growth to All-Time High (4).
The current surge in coin selling at a loss probably suggests that a lot of stop-losses have been set under the February 10 low (7) near 43700. And the drop in bitcoin quote on the last day of winter to 43300 led to their activation.
Anyway, technically speaking, bitcoin price should feel support from the up-trend line (5) and the demand zone (8) built from the momentum day of February 8, when buyers on rising volumes (9) “grab bitcoins like hotcakes”.