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Bitcoin’s SOPR Indicator Hints at a Possible Bottom for BTC

In brief:

  • Bitcoin’s SOPR indicator has seen a full reset, turning negative for the first time in 5 months
  • The indicator points to a possible local bottom for Bitcoin
  • The last time it fell this low, Bitcoin went from $33,400 to $57,400
  • The crypto fear and greed index has fallen to levels last seen in late January when Bitcoin fell to $30k then went on to post a new all-time high above $58k
  • Bitcoin’s weekly/monthly close is the final bearish hurdle for BTC

Bitcoin’s SOPR indicator has experienced a full rest and turned negative for the first time in five months. This is according to data shared by the team at Glassnode who also pointed out that the SOPR indicator going negative means that investors are on average moving BTC at a loss. Below is the full statement by the team at Glassnode and a chart demonstrating the drop in the SOPR.

The daily #Bitcoin Spent Output Profit Ratio (SOPR) has seen a full reset, and turned negative for the first time in five months – investors were on average moving BTC at a slight loss, indicating profit-taking has abated.

Bitcoin’s SOPR Hints of a Possible Bottom for Bitcoin

The SOPR, or Spent Output Profit Ratio, ‘represents the profit ratio of coins moved on-chain, measured through the variation between purchase price and sale price’. A SOPR value greater than 1 means that investors are selling at a profit. When the SOPR goes below 1 as is the case right now with Bitcoin, investors are selling at a loss. 

The team at Bloqport has seen the recent drop in the SOPR as a hint that Bitcoin has bottomed at least for the short term. According to Bloqport, such a reset last happened when Bitcoin went from $33,400 to $57,400. Furthermore, funding rates have also cooled off thus providing the ideal environment for another leg up for Bitcoin.

Crypto Fear and Greed Index Falls to Levels Last Seen in Late January

In addition to the SOPR experiencing a rest, the Crypto fear and Greed index has dropped to 55 after plateauing above 90 for the better part of February. An index value of 55 was last witnessed in late January when Bitcoin bottomed at $30k. The local bottom at $30k set the pace for Bitcoin to post a new all-time high of $58,389 – Binance rate – on the 21st of February.

Therefore, chances of a local bottom are high for Bitcoin. However, Bitcoin has one last bearish hurdle for the month of February in the form of the weekly and monthly close only a few hours away. This event could provide additional selling pressure that could ultimately break Bitcoin’s $44k support and send it lower to the $42k support zone.

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