Bitcoin “Profit-Taking Has Completed,” Top Analyst Reveals

Keshav Verma

1 year ago

3 mins read

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An analyst has explained how profit-taking looks to have finished for Bitcoin in what has been a “very healthy reset” for the market.

Bitcoin SOPR Suggests Profit-Taking From Investors Has Cooled Off

In a new post on X, analyst Willy Woo has discussed about the latest trend occurring in the Bitcoin Spent Output Profit Ratio (SOPR). The SOPR is an on-chain indicator that basically tells us about whether the Bitcoin investors as a whole are selling their coins at a profit or loss right now.

When the value of this metric is greater than 1, it means that the average holder in the sector could be assumed to be moving coins at some net profit currently. On the other hand, the indicator being negative implies loss realization is the dominant mode of selling in the market.

Naturally, the SOPR being exactly equal to 1 suggests the total profits being realized are exactly equal to the losses at the moment and thus, the investors are just breaking-even on their selling.

Now, here is a chart that shows the trend in the Bitcoin SOPR over the last few years:

The value of the metric seems to have been neutral in recent days | Source: @woonomic on X

As is visible in the above graph, the Bitcoin SOPR had spiked to highly positive levels earlier when the cryptocurrency’s price had observed its rally towards a new all-time high (ATH).

This would suggest that the investors had been participating in some aggressive profit-taking during this run. From the chart, it’s visible that such a trend was also observed around the start of the 2021 bull run.

With the consolidation, the asset has gone through since the ATH, the indicator’s value has also seen a cooldown. As Woo has highlighted in the chart, the metric has now approached the neutral mark.

It would appear that two months after the profit-taking peaked, the appetite for harvesting gains has potentially finally disappeared among the investors. The analyst says this is a very healthy reset for the cryptocurrency, especially as the capital inflows have once again been picking up for the coin.

Looks like the indicator has gone through a turnaround recently | Source: @woonomic

From the chart, it’s apparent that the Bitcoin network flows had been following an overall downward trajectory earlier when the consolidation was taking place, but recently, capital injections into the coin have once again been on the rise.

This is a similar trend to what was observed earlier in the year during the crash following the approval of the spot exchange-traded funds (ETFs). The turnabout in capital inflows back then was what led into the rally that took the cryptocurrency to the current ATH.

BTC Price

Bitcoin had seen a pullback under $66,000 yesterday, raising worries that the recovery surge had already fizzled out. This drop only lasted briefly, though, as the coin has returned above $67,000 today.

The price of the asset appears to have been consolidating sideways over the last few days | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, woocharts.com, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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