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New Indicators Point to Bitcoin Sell-off Slow Down
As Bitcoin recovers from recent lows of $43,500, new indicators have shown that the sell-off may be slowing down.
SOPR dips in “full reset”
For the first time since September 2020, the SOPR (Spent Output Profit Ratio) indicator dipped below 1. This indicator, which tracks the variation between purchasing price and sale price, is used to represent overall market profit and loss. A value greater than 1 implies that cumulatively, people are selling at a profit; whereas a value below 1 shows that people would be selling at a loss.
The graph above shows that investors were recently selling their Bitcoin positions at a slight loss. However, this may be a positive sign. Corrections during bull markets drive the SOPR value below 1, but only momentarily. This is because traders and speculators remain optimistic that price levels will recover.
Bitcoin Supply Continues to Decrease
Bitcoin’s recent supply shortage is another reason to remain optimistic. With yesterday’s news that Bitcoin miners have begun accumulating mining rewards and total net realized losses reaching yearly high of $243 million on Saturday, Bitcoin’s available float has likely dwindled.
In the past month alone, GrayScale Investments purchased more than $700 million worth of Bitcoin and Ethereum. If similar levels of corporate demand and massive institutional purchases continue in the near future with similar supply levels, the top cryptocurrency will likely see new all-time highs.
Featured image from Unsplash
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