An evaluation of the Bitcoin [BTC] Spent Output Profit Ratio (SOPR) has revealed that it has surpassed a critical threshold, marking its second warning signal recently. The SOPR reached its peak at 1.03 before starting to decline.
Despite the SOPR value dropping from its peak, it still remains slightly above the important 1.01 level indicated by a red dashed line.
Historically, Bitcoin has exhibited a pattern of issuing two cautionary signals prior to entering a bearish market phase, aligning with the current circumstances.
Maintaining a position above the 1.01 SOPR threshold could potentially enable Bitcoin to continue its upward trajectory, even in the presence of the bearish signal and the prolonged period below the $100K price threshold.
Conversely, a sustained decline below this threshold in SOPR could signify an increased probability of market consolidation for BTC or a price dip, serving as a crucial cue for potential adjustments in investor strategies.
Shift in BTC Dominance Signals…
A deeper analysis of Bitcoin Dominance (BTC.D) reveals definitive signs of impending market shifts. Currently, BTC Dominance stands at approximately 61.20%, exhibiting a trendline resistance that it has consistently failed to breach.
Highlighted by specific instances depicted by arrows, these dominance levels have repeatedly tested the trendline, reacting to broader market forces. The Stochastic RSI (Stoch RSI) is showing an upward trend, hinting at possible conditions of being overbought.
Meanwhile, the recent outflow of $156.8 million from U.S. Spot Bitcoin ETFs hints at a potential reversal in dominance. This outflow may indicate a shift in investor sentiment, diverting attention towards alternative cryptocurrencies, a trend often observed when BTC.D experiences a decline.
If the overbought conditions indicated by Stoch RSI trigger a correction, it could lead to further decreases in BTC.D, potentially favoring altcoins as investment capital diversifies. This scenario supports the SOPR signal emitted by BTC, which has issued a warning.
On the flip side, should BTC manage to sustain its dominance above the crucial trendline, it could defy the prevailing caution signals and retain control over the market.
This could drive its price upwards if investor sentiment stabilizes, redirecting capital inflows back towards Bitcoin.