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- BTCs The Spend Output Profit Ratio has suggested that there may be a local price floor.
- However, the recent movement of dormant coins suggests otherwise.
Bitcoins [BTC] The Spent Output Profit Ratio (SOPR) has dropped below the critical threshold of 0.97, suggesting that the price of the coin has reached a local low and a price recovery could be imminent, pseudonymous Cryptoquant analyst Tarekon chain found in a new report.
Read Bitcoin’s [BTC] Price forecast 2023-2024
The SOPR is an important metric used to measure the profitability of coins moved on the blockchain. When an asset’s SOPR is greater than one, it means that coins are moving at a profit on average. Conversely, a SOPR value lower than 1 indicates that the coins moved are moving at a loss on average.
Based on the historical precedents of metrics, Tarekonchain noted:
“Market bottoms usually occur when the SOPR falls below the critical threshold of 0.97. This means that during bear markets or major corrections, investors often capitulate and sell their Bitcoin holdings at a loss, causing the SOPR to drop below this threshold.”
According to the analyst, when BTC’s SOPR fell below this critical threshold in January 2019 and April 2020, it was followed by a recovery in the value of the king coin.
“As of November 2022, the SOPR metric briefly reached the 0.97 threshold, indicating that investor sentiment was approaching a critical level,” Tarekonchain added.
Source: CryptoQuant
This measure suggests otherwise
While BTC’s SOPR signaled a “potential market bottom,” according to Tarekonchain, the coin’s Age Consumed statistic suggested otherwise.
The Age Consumed metric tracks the number of tokens that change addresses on a given date, multiplied by the time they were last moved.
Normally, a rise in the number of ages consumed suggests that a significant number of tokens that were once inactive have changed addresses. This indicates a sudden and sharp shift in the behavior of long-term investors.
Conversely, when the Age Consumed metric falls, long-held coins are left in wallet addresses without being traded.
This measure is an excellent tool for tracking the local highs and lows of assets, as long-term holders are not often susceptible to rapid movements of their dormant coins. Therefore, when this happens, it results in major shifts in market conditions.
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According to records maintained by Sanitation, BTC’s Age Consumed recorded a significant jump on August 29. This was followed by a fall in the value of the coin, which indicates that the coin topped out at $27,727.
Source: Sentiment
This movement of dormant coins also coincided with the Securities and Exchange Commission (SEC) announcing its decision to extend the dates within which it will consider all pending Bitcoin Spot ETF applications. This move further dampened market sentiment and forced the price of BTC to drop.