BITCOIN FRACTUAL MOVE - FINAL SHAKE-OUT 📉 BEFORE MOON 🚀 🌕 ???
Bitcoin in April and May 2023 still exhibits tough price action. It seems like THE ONLY TREND from here is BEARISH? NOT SO FAST!!! Let's quickly jump into more action.
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CURRENT PRICE ACTION
After hitting mini bottom at 25.8k on 12th of May, Bitcoin rebounded mildly and got quickly taken out at 27.5k zone. Some calling a major H&S formation, having the price completed the pattern. Some even making bold statement of 15k down we go. Bitcoin is well-known for its volatility and anything is plausible with this asset. However, will be it allowed to dip such low levels?
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SOPR - SPENT OUTPUT PROFIT RATIO
Technical Analysis a trading discipline that is used for the evaluation of investments and identification of trading opportunities, having an assumption that all price actions and volumes have already reflected any incidents and events within the market.
There's NO ONE "GO-TO" method to analyse/evaluate/identify trading opportunities of an asset and Bitcoin is the same. Let's take a look at one of the most powerful tools of TradingView x Glassnode collaboration - SOPR.
The SOPR (Spent Output Profit Ratio) indicator provides insight into macro market sentiment, profitability and losses taken over a particular time-frame. It reflects the degree of realised profit for all coins moved on-chain. The SOPR indicator can be considered within the following framework:
1. SOPR EVALUATION #1: PROFIT-TAKING SENTIMENT
From Nov 2022 til now, Bitcoin has rallied an immense 100% gain (form 15.5k to 31k). Amongst the decline of all assets across the globe and unstable economic outlook, Bitcoin has shown resilience despite global uncertainty. We briefly separate this rally into 3 sections:
2. SOPR EVALUATION #2: SHAKE-OUT BEHAVIOUR
Apart from Capitulation Zone, Bitcoin has consolidated on 2 occasions:
1. Consolidation range #1: 21.8k - 23.1k: After a fake break-out to 24k, Bitcoin quickly plummeted to 22k and created a fractual lower high at 22.5k. The coin eventually broke out of lower consolidation SUPPORT LEVEL of 23.1k and deep-dived to 20k zone. Although SOPR did dipped below 1.0 level, it was a minor dip of just 0.98. This shows that lots of hodlers were willing to hold their coins and not ready for any loss-taking action.
2. Consolidation range #2: 27k - 30k: A surprisingly similar pattern is manifested. Bitcoin ALSO did a fake break-out to 31k then quickly plummeted to 27.5k before created a fratual lower high at 29k. Currently, Bitcoin has broken out of lower consolidation SUPPORT LEVEL of 27k and been hovering around 26k - 27k zone. SOPR started to decline. As SOPR has steadily gained over the past 6 months from Capitulation Zone to Transition Zone to now Profit-taking Zone, it is not surprising that profit-taking will be in play during the next week or so, pushing SOPR back to 1.0 level.
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WHAT ELSE?
Another thing to have an eye on is The Supply Last Active 1+ Years Ago. This is the supply that has not moved in at least 1 year. The more this cohort rises in number, the more confidence within the space of both short- and long-term. Not only do we exceed 60% level of 1+ year hodlers, we also hit ATH, a whooping 67%.
AIN'T NO DIAMOND WITHOUT IMMENSE PRESSURE. BE PATIENT AND STACK UP YOUR PILE.
_______________________________________________________________________________________________________________________________________________________
CURRENT PRICE ACTION
After hitting mini bottom at 25.8k on 12th of May, Bitcoin rebounded mildly and got quickly taken out at 27.5k zone. Some calling a major H&S formation, having the price completed the pattern. Some even making bold statement of 15k down we go. Bitcoin is well-known for its volatility and anything is plausible with this asset. However, will be it allowed to dip such low levels?
_______________________________________________________________________________________________________________________________________________________
SOPR - SPENT OUTPUT PROFIT RATIO
Technical Analysis a trading discipline that is used for the evaluation of investments and identification of trading opportunities, having an assumption that all price actions and volumes have already reflected any incidents and events within the market.
There's NO ONE "GO-TO" method to analyse/evaluate/identify trading opportunities of an asset and Bitcoin is the same. Let's take a look at one of the most powerful tools of TradingView x Glassnode collaboration - SOPR.
The SOPR (Spent Output Profit Ratio) indicator provides insight into macro market sentiment, profitability and losses taken over a particular time-frame. It reflects the degree of realised profit for all coins moved on-chain. The SOPR indicator can be considered within the following framework:
- SOPR values greater than 1 implies that the coins moved that day are, on average, selling at a profit (price sold is greater than the price paid).
- SOPR value less than 1 implies that the coins moved that day are, on average, selling at a loss (price sold is less than the price paid).
- SOPR value of exactly 1 implies that the coins moved that day are, on average, selling coins at break even.
- SOPR trending higher implies profits are being realised with potential for previously illiquid supply being returned to liquid circulation
- SOPR trending lower implies losses are being realised and/or profitable coins are not being spent.
1. SOPR EVALUATION #1: PROFIT-TAKING SENTIMENT
From Nov 2022 til now, Bitcoin has rallied an immense 100% gain (form 15.5k to 31k). Amongst the decline of all assets across the globe and unstable economic outlook, Bitcoin has shown resilience despite global uncertainty. We briefly separate this rally into 3 sections:
- Capitulation Zone: Where SOPR is way below 1.0. As price recovers, SOPR rises back to 1.0 level but fails to overcome the level as sell pressure is huge. This causes 3 major realised loss events, resulting in SOPR way below 0.95 mark.
- Transition Zone: Having mentioned above, 3 major events that lead to a mass realised loss are actually well-absorbed. As the result, price fails to dip any lower than 15.5k . As Bitcoin quickly escapes 15.5k - 18k zone, Bitcoin supply, was once underwater or fresh buyers, is now back to being profitable. The incentive to sell at a minor loss or with small profit margin rises, due to market uncertainty. This leads to SOPR revolves around 1.0 level.
- Profit-taking Zone: Confidence within the space increases, a substantial amount of buyers is ready to stack up their pile at 20k on 11th of March. Realised loss is softened as SOPR is just below 1.0 when Bitcoin hits 20k. Bitcoin strikes for 24k and then hits 30k mark, leading gradually elevation in profit-taking incentive. SOPR stays well above 1.0 level.
2. SOPR EVALUATION #2: SHAKE-OUT BEHAVIOUR
Apart from Capitulation Zone, Bitcoin has consolidated on 2 occasions:
1. Consolidation range #1: 21.8k - 23.1k: After a fake break-out to 24k, Bitcoin quickly plummeted to 22k and created a fractual lower high at 22.5k. The coin eventually broke out of lower consolidation SUPPORT LEVEL of 23.1k and deep-dived to 20k zone. Although SOPR did dipped below 1.0 level, it was a minor dip of just 0.98. This shows that lots of hodlers were willing to hold their coins and not ready for any loss-taking action.
2. Consolidation range #2: 27k - 30k: A surprisingly similar pattern is manifested. Bitcoin ALSO did a fake break-out to 31k then quickly plummeted to 27.5k before created a fratual lower high at 29k. Currently, Bitcoin has broken out of lower consolidation SUPPORT LEVEL of 27k and been hovering around 26k - 27k zone. SOPR started to decline. As SOPR has steadily gained over the past 6 months from Capitulation Zone to Transition Zone to now Profit-taking Zone, it is not surprising that profit-taking will be in play during the next week or so, pushing SOPR back to 1.0 level.
_______________________________________________________________________________________________________________________________________________________
WHAT ELSE?
Another thing to have an eye on is The Supply Last Active 1+ Years Ago. This is the supply that has not moved in at least 1 year. The more this cohort rises in number, the more confidence within the space of both short- and long-term. Not only do we exceed 60% level of 1+ year hodlers, we also hit ATH, a whooping 67%.
AIN'T NO DIAMOND WITHOUT IMMENSE PRESSURE. BE PATIENT AND STACK UP YOUR PILE.
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