Key Points
The STH-SOPR, an indicator of short-term investor behaviour, has exceeded the value of 1. This suggests that short-term profit-taking may be imminent. Some market observers have predicted that Bitcoin could reach $58,000. However, they also warn of a potentially significant retracement.
The anticipated correction of Bitcoin’s value is a topic of debate among market participants. The key question that arises is whether this drawdown will occur before or after the halving event.
Differing Predictions
CryptoOnchain, a pseudonymous author on CryptoQuant, has suggested that Bitcoin might drop to $48,000 soon. This conclusion is based on the Short Term Holder (STH) Spent Output Profit Ratio (SOPR). The STH-SOPR measures the behaviour of short-term investors by considering the output younger than 155 days. When the value of the STH-SOPR exceeds 1, it indicates that investors are selling at a profit. Conversely, a value below 1 indicates that investors are selling at a loss.
The chart indicates that the STH-SOPR value has risen above 1. This suggests that Bitcoin’s price has corrected over the past few months. Alongside the on-chain analysis, CryptoQuant also examined the technical angle. The analyst noted that Bitcoin is approaching the selling area of short-term investors. The technical chart also confirms this.
However, Michaël van de Poppe has a different perspective. He believes that Bitcoin’s correction will occur, but not before prices reach $54,000 or $58,000. He also warned that the decline could be substantial, with Bitcoin potentially dropping as low as 40,000 after the halving.
Historically, Bitcoin’s price has risen before the halving. After the event, the coin loses a significant part of its value before heading for a new high. An analysis of the price action before the last two halvings confirms this pattern.
The direction Bitcoin might take this time around could depend on where capital rotates. If market participants decide to drive liquidity into Bitcoin, the price might rise toward $54,000. However, if capital rotates into altcoins, Bitcoin’s value could decrease. The presence of institutional money, which was not present during the last two halvings, could potentially influence the outcome.
