Key Points
- The STH-SOPR and Stock to Flow ratio indicators suggest a potential price increase for Bitcoin.
- Bitcoin’s value might not drop as low as $54,000 before a reversal to the upside begins.
The STH-SOPR and one other indicator suggest that a price increase for Bitcoin is on the horizon. The surge in the Stock to Flow ratio supports this potential price increase.
Understanding Price Predictions
The STH-SOPR is a key factor in this prediction. STH stands for Short-Term Holder, while SOPR stands for Spent Output Profit Ratio. This metric indicates whether Bitcoin holders who purchased the coin within a 155-day window are selling at a loss or profit.
If the value is below 1, it means the holders are selling at a loss. However, if the value is above 1, it suggests that they are selling at a profit. Currently, the reading is exactly 0.99, a crucial point for Bitcoin, as it could go either way.
Indicators of Change
In the past, a reading below 1 marked the end of a downtrend. Therefore, if the STH-SOPR remains below the threshold for some time, Bitcoin’s price could be preparing to erase some of its recent losses.
This doesn’t mean that Bitcoin’s prediction to $61,000 or $60,000 won’t happen. Instead, it implies that the coin’s value might not drop as low as $54,000 before an upward reversal begins.
Another indicator supporting this forecast is the Bulls And Bears provided by IntoTheBlock. This metric compares the addresses that bought more than 1% of the 24-hour trading volume to those that sold more than 1% within the same period.
Bullish Signs
If the addresses that bought outweigh the addresses that sold, it is a bullish sign. Currently, the Bulls And Bears indicator is +2 in favor of bulls. While this might not have an immediate effect on Bitcoin, maintaining this position over the coming days to weeks could help end Bitcoin’s correction.
If this is the case, Bitcoin’s price could begin a move that takes it back to $66,000. The Stock to Flow ratio, which spiked to 640 on June 23rd, also supports a price increase.
This ratio measures an asset’s vulnerability to inflation and its scarcity. A low reading indicates a high inflation rate, making it difficult for the price to increase in the mid to long-term. However, a high reading suggests that Bitcoin has a low inflation rate, meaning the value might retain a high level of price increase over time.
Given this data, Bitcoin might recover within a short period. However, this prediction could be invalidated if large investors in Bitcoin continue to sell some of their holdings.
