First of all, need to explain metrics. LTH SOPR - Long Term Output Profit Ratio is a ratio of spent outputs (lived more than 155 days) in profit at the time of the window. The adjustment was made by not accounting for 155 days less lived coins' movements to track long-term investors. STH SOPR - Short Term Output Profit Ratio is a ratio of spent outputs (alive more than 1 hour and less than 155 days) in profit at the time of the window. The adjustment was made by not accounting for an hour less lived and 155 days more lived coins' movements to track short-term investors. Values over '1' indicate more investors are selling at a profit. Values below '1' indicate more investors are selling at a loss. On the LTH SOPR chart, I have added a 30-day simple moving average. As you can see, in a bear market, level 1 acts as resistance, while in a bull market, this level serves as strong support. Analyzing the previous two periods in 2016 and 2020, after crossing and holding level 1, Bitcoin entered early bull market phase. The exception was during the 2019-2020 period, which was impacted by the black swan event, the C19 virus. On the other hand, when analyzing the behavior of short-term investors, level 1 similarly acts as support in a bull market and resistance in a bear market. Similar to the behavior of long-term investors in 2016 and 2020, after crossing level 1, Bitcoin initiated the bull market phase because investors did not sell their BTC at a loss. The exception here was the period from 2019 until the occurrence of C19. If there is no black swan-type occurrence such as a new virus or armed conflict, all indications suggest that the market is in the early stages of the bull market. Remember that past performance does not guarantee future results.
Written by IT Tech