Anticipating a short-term recovery in Bitcoin (BTC) may not be on the minds of many market participants, but a pseudonymous analyst known as Crazzyblockk argues that it is not an impossible outcome. The analyst points to the Spent Output Profit Ratio (SOPR) as a key indicator supporting this potential turnaround. As a macro market sentiment metric, the SOPR measures the extent of realized profits being transferred on-chain.
When the SOPR value exceeds 1, it indicates that investors are selling at a profit, while values below 1 suggest average selling at a loss. Currently, the SOPR value is above 1, hinting at a favorable scenario. However, what Crazzyblockk finds noteworthy is the sustained position of the SOPR since March. Historical data reveals that Bitcoin’s SOPR remained above this level during significant periods such as 2017 and 2019.
Comparing the current SOPR state to those in 2017 and 2019, Crazzyblockk notes that maintaining the SOPR above 1 for consecutive months, with holders’ pocket value surpassing this level, indicates a strong interest in remaining in the market and seeking profitability. This trend was instrumental in Bitcoin’s price surge to $20,000 in 2017 and its subsequent all-time high (ATH) in 2021.
According to the analyst, the market exhibits strong interest, and the existing demand seems capable of withstanding any substantial selling pressure. Meanwhile, Bitcoin continues its consolidation phase, but the Estimated Leverage Ratio (ELR) has been steadily increasing. ELR measures the leverage utilized by users, with higher values suggesting greater risk-taking in derivative trading. This rise in ELR aligns with the previously mentioned market interest, regardless of whether participants take long or short positions.
Furthermore, oinonen_t, another analyst from CryptoQuant, highlights that Bitcoin’s strength remains unaffected by the liquidity collapse in the market. The analyst points to rising accumulation and active addresses as indicators of resilience. While selling pressure arises from market makers, who recently dumped a significant number of Binance-related altcoins, thus affecting liquidity, Bitcoin’s technical and fundamental indicators reflect strength in contrast to the challenging market environment.
In conclusion, Crazzyblockk’s analysis presents the possibility of a short-term Bitcoin recovery, supported by the sustained position of the SOPR metric. The market demonstrates a strong interest, and rising ELR values indicate increasing risk-taking. Despite liquidity challenges caused by market makers, Bitcoin’s technical and fundamental indicators suggest underlying strength. As the market evolves, continued monitoring of these metrics can provide valuable insights for investors and traders alike.
