SOPR Indicator Shows Promising Signs for Bitcoin’s Future
Bitcoin has seen a rollercoaster ride in recent months with its price fluctuating greatly. However, according to a recent report by CryptoQuant, long-term holders (LTH) suggest that we are currently in a recovery phase.
The report highlights the significance of on-chain spending of coins with more than 155 days of dormancy, which often signals longer-term cycles in Bitcoin. The LTH SOPR (Spent Output Profit Ratio) is a metric that tracks the ratio between the price at which a coin was spent and its price at the time of creation.
When applying a monthly average over the LTH SOPR, the report shows extreme points of spending in losses, which is consistent with bear market bottoms. The report indicates that at all other similar times in Bitcoin’s history when the SOPR reached such negative values, the price never again retreated below that cue point.
This indicator suggests that the Bitcoin price will never return below the value it established in November-December 2021. However, it is important to note that this indicator signals long-term cycles, and it takes years for extremes to be reached. Short-term volatility is not captured by this chart.
The report advises that long-term investors can benefit from strategic allocations based on this metric. Still, traders should look for other indicators during these transitional phases.
Bitcoin has been the subject of much debate in recent years. Some see it as the future of money, while others view it as a speculative asset. Regardless of one’s opinion, the current report suggests that Bitcoin is in a recovery phase and could be an attractive investment for long-term holders.
However, it is crucial to keep in mind that Bitcoin is a highly volatile asset, and investors should do their due diligence before investing in it. The market is unpredictable, and while the LTH SOPR indicator may provide valuable insights into long-term cycles, it is not the only metric to consider. Traders and investors alike should always exercise caution and have a solid understanding of the risks involved when investing in any asset, including Bitcoin.
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