- BTC’s price and SOPR moved sideways as investors remain uncertain about the direction of the market.
- Long held BTC coins remain inactive in wallet addresses.
Like that of Bitcoin [BTC] price continued to fluctuate within a narrow range over the past month, pseudonymous CryptoQuant analyst Joao Wedson found that the coin’s Spend Output Profit Ratio (SOPR) indicator on an 80-day moving average also remained sideways.
Source: CryptoQuant
Read Bitcoin [BTC] Price Forecast 2023-24
The SOPR metric tracks coin holders’ profit or loss by analyzing the difference between the price at which they bought their coins and the price at which they are spent or moved on the blockchain.
When an asset’s SOPR metric moves sideways, it means that the proportion of output spent profitably within a given time frame does not increase or decrease significantly.
According to Wedson, in the current BTC market, this suggests a possible distribution scenario, where short-term holders can sell their coins while the market remains vulnerable to a price drop.
Buy little, sell little. What then?
BTC price trading within a tight range and sideways movement of its SOPR indicator indicate a period of consolidation or indecision on the part of its investors.
This often occurs when market participants wait for more clarity or a new catalyst before taking important positions in the market.
Reviewing BTC’s Bollinger Bands indicator on a 24-hour chart lent credibility to this position. At the time of writing, the price was trading in the middle of the upper band and lower band of the Bollinger Bands.
When the price of an asset trades in such a way, it suggests that there is no strong buying or selling pressure in the market and that the price is moving within a relatively tight range.
Also, at -92.12k at time of press, BTC on-balance volume has remained sideways since late April. The indicator uses volume data to track the flow of money in and out of an asset.
When it moves within a tight range, the buying and selling pressures are about equal and both traders and investors remain uncertain about the next direction the market is likely to move.
Source: BTC/USDT on TradingView
Further, long-held BTC coins on-chain have remained dormant, contributing to the sideways movement of the asset’s price. For example, after peaking on April 17, BTC’s Age Consumed stat has been moving down since then.
This metric tracks the number of tokens that have changed address on a given date multiplied by the time since they were last moved. When it peaks, it means that a large number of tokens have changed addresses after being inactive for an extended period of time. This can drive up the value of the asset in question.
Conversely, when the Age Consumed metric falls, long-held coins remain in wallet addresses without being traded.
How much are 1,10,100 BTC worth today
Finally, after a slight dip on April 17, BTC’s Mean Dollar Invested Age (MDIA) metric started to rise. According to Sanitationwhen an asset moves in such a way:
“It means that the location where the investments are located becomes more and more dormant over time. If there is a long period of time (months at a time) where this value continues to rise, it generally means there is some worrying stagnation on that coin’s network. And stagnation makes it difficult for prices to rise further.”
Source: Sentiment
In order for the price of BTC to regain its $30,000 price, sentiments need to improve and long-held coins need to switch hands.