This On-Chain Indicator Suggests Bitcoin Still Only 1/3rd Into Bear Market

Keshav Verma

1 year ago

3 mins read

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The Bitcoin long-term holder SOPR may suggest that the crypto has still only gone one-third of the way through the latest bear market.

Bitcoin 20-day SMA Long-Term Holder SOPR Has Only Been 86 Days Into Bottoming Zone

As pointed out by an analyst in a CryptoQuant post, the crypto is still only 1/3rd of the way into the 260 days average historical bottoming period.

The relevant indicator here is the “Spent Output Profit Ratio” (or SOPR in brief), which tells us about whether the average Bitcoin investor is selling at a profit or at a loss right now.

The metric works by looking at the history of each coin being sold on the chain to see what price it was last moved at. If this previous selling price was less than the latest BTC value, then the coin has just been sold at a profit. While if the last value was more than the current one, then that particular coin realized some loss.

When the value of the SOPR is greater than one, it means the market as a whole is selling at a profit right now.

On the other hand, the indicator being less than one implies the average holder is moving coins at a loss at the moment.

The “long-term holders” (LTHs) is the Bitcoin cohort that includes all investors who have held onto their coins for at least 155 days without selling or moving them.

Now, here is a chart that shows the trend in the BTC SOPR (20-day MA) specifically for these LTHs over the the last several years:

Looks like the value of the metric has been pretty low recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin LTH SOPR (20-day SMA) dipped below the “one” mark a while back.

Also, in the chart the quant has marked all the relevant zones of trend for the indicator in relation to the bear market.

It seems like historical bottoming periods have lasted whenever the metric has been stuck below the breakeven point.

On average, past bear markets have lasted around 260 days based on the LTH SOPR. In the current cycle, the coin has so far been 86 days into the bottoming zone.

This would suggest that if Bitcoin ends this bear market in about the same time as the average, then the crypto is still only one-third of the way through.

BTC Price

At the time of writing, Bitcoin’s price floats around $23k, down 2% in the last week. Over the past month, the coin has gained 13% in value.

The value of the crypto seems to have been moving sideways during the last few days | Source: BTCUSD on TradingView

Featured image from mana5280 on Unsplash.com, charts from TradingView.com, CryptoQuant.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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