Bitcoin (BTC) holders hoping to return to the upside may not have to wait as long as the popular index gives cause for optimism.
Bitcoin Spending Profit Ratio (SOPR) indicates that the current BTC exchange rate correction is almost complete, according to Glassnode’s chain monitoring provider.
Bitcoin correction should stop soon
The SOPR system tracks the percentage of currencies that move at a profit – in other words, whether traders trade at a profit or at a loss.
When the index is higher than 1 and falls, it means that sellers share their assets with different profit margins. After hitting 1, “dropped” SOPR, sellers sold everything they could, which reduces price pressure and theoretically allows Bitcoin rally again.
SOPR has shown its strength at various stages of the recent upward cycles, and the reset phenomenon has been particularly successful in identifying price declines in 2020.
Now that the downturn is close to magic 1, market participants hope that the heavy sales that took place last week will be the end rather than the beginning of the poor results.
“So if we’re in a beef market now, according to SOPR, the correction is not over yet, but it will soon be over,” the popular Twitter account CryptoHamster tweeted on Tuesday, uploading the Glassnode chart.
The tributaries speak for themselves
If SOPR repeats its historical pattern, it may please some investors who have already seen significant volatility this year.
While commentators argue that Bitcoin may not continue its vertical growth for long under any circumstances, the cold mark marks the reaction to Bitcoin’s adjustment from $ 42,000 to less than $ 30,000.
Amid many explanations for the sudden decline, spokesmen highlight institutional engagement as a means of panic from retailers and criticism of the mainstream news and financial sector. For example, Grayscale continued its purchases after the end of the holiday, regularly adding several times more BTC than mining during the same period.
Entrepreneur Alistair Millen summed up on Twitter on Tuesday: “Last week, $ 1.31 billion dollars flowed into Bitcoin and cryptocurrency investment products (a new record) as investors climbed for a buy-in.”
He added that 97% of the new capital was invested specifically in bitcoin.