Bitcoin’s SOPR Indicator Issues Warning Signal – Reasons to Monitor!
An evaluation of the Spent Output Profit Ratio (SOPR) for Bitcoin indicates that it has recently triggered a second sell alert by crossing a crucial threshold. The SOPR reached a peak of 1.03 before starting to decline.
Although the SOPR has dipped from its peak, it currently lingers slightly above the critical level of 1.01, demarcated by a red dashed line.
Over time, Bitcoin has typically shown a pattern of giving two sell signals before entering a bearish market phase, a pattern that resonates with the current context.
Continuing to stay above the SOPR threshold of 1.01 could potentially allow Bitcoin to sustain its upward trajectory, notwithstanding the bearish indication and the prolonged period below the $100K price point.
However, a persistent drop below this threshold in the SOPR indicates an escalating possibility of market consolidation for Bitcoin or a decrease in prices, serving as a crucial cue for potential strategic adjustments by investors.
Shifts in BTC Dominance Pattern…
A deeper analysis of Bitcoin Dominance (BTC.D) reveals discernible signals pointing towards market shifts. Currently, Bitcoin Dominance stands at approximately 61.20%, sticking to a trendline that has consistently prevented breaches.
Certain key points, indicated by arrows, illustrate instances where the dominance levels tested this trendline, reacting to broader market conditions. The Stochastic RSI (Stoch RSI) is on the rise, hinting at potential overbought situations.
Meanwhile, the recent net outflow of $156.8 million from U.S. Spot Bitcoin ETFs indicates a probable reversal in dominance trends. This outflow could signal a change in investor sentiment, potentially diverting attention towards alternative cryptocurrencies, a pattern often observed during declines in BTC.D.
If the overbought conditions indicated by Stoch RSI result in a correction, it might lead to further declines in Bitcoin Dominance, ultimately benefiting alternative coins as capital reshuffles. This aligns with Bitcoin’s SOPR warning signal, signifying a sell alert.
Conversely, if Bitcoin manages to sustain its dominance above the crucial trendline, it could defy the existing sell signals and retain its grip on the market.
Under such circumstances, there is a possibility of driving Bitcoin’s value upwards if investor sentiment stabilizes and capital flows back into Bitcoin.