Bitcoin’s Spent Output Profit Ratio (SOPR) could repeat history, helping investors stay profitable, as ELR indicated a renewed interest in opening up BTC derivatives contracts
Expecting a short-term Bitcoin [BTC] rally is something many market participants may not expect. However, a pseudonymous CryptoQuant analyst Crazyblockk has spoken out that it is not impossible.
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According to the analyst, the Spent Output Profit Ratio (SOPR) position offers this potential. As a macro market sentiment indicator, the SOPR measures the degree of realized gains moved on the blockchain.
BTC: Offering an Advantage to Holders
SOPR values above 1 suggest that investors are selling at a profit. On the other hand, SOPR values below 1 indicate an average sale at a loss. And, at the time, the value of the metric was above.
However, Crazzyblockk’s argument is the longevity the metric has had in its actual position. In fact, the data sets revealed that Bitcoin’s SOPR has remained above value since March according to a graphic published by CryptoQuant. This led the analyst to compare the status in 2017 and 2019 with today’s SOPR.
Between 2015 and 2016, the SOPR consistently maintained its value above 1. Therefore, this led to the price of BTC reaching $20 000 in 2017. The analyst also mentioned that the SOPR condition in 2019 was crucial for the BTC All-Time High (ATH) in 2021 Crazzyblock added, that when the number 1 in this data holds for consecutive months and the pocket value of these holders moves above this level, it is a sign of strong interest in staying in the market and earning profitability. The 2015 and 2019 price cycles are good examples.
According to the analyst, there is strong interest in the market. Moreover, the precise demand is sufficient to withstand any strong selling pressure, the analyst added.
Big Bets, in Which Direction?
Meanwhile, BTC continued its consolidation over the past 24 hours, despite that, the estimated leverage ratio (ELR) has been rising.
Typically, the ELR shows how much leverage is used by users. And it is calculated by dividing the open interest (OI) by the coin reserves. Lower ELR values suggest that investors are being cautious with the leverage used.
However, when ELR rises, it means that participants are placing large bets on their derivatives traders, this can be observed in a graphic published by CryptoQuant
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Whether long or short, the rise also aligns with the aforementioned discussion about strong interest in the market.
In addition, oinonen_t, another CryptoQuant analyst, noted that the collapse of liquidity in the market has not negatively affected Bitcoin’s strength. Citing growing accumulation and active addresses, the analyst noted that the real selling pressure comes from the direction of market makers, who recently dumped a large number of Binance-related altcoins, collapsing liquidity. In contrast to the challenging market environment, bitcoin’s technical and fundamental indicators reflect strength.
By Marina Meza
