Key Points
- The increase in realized losses on-chain suggests another Bitcoin rally could be imminent.
- Historical data from the cycle detector indicates that Bitcoin is not currently in a bear phase.
Bitcoin’s [BTC] potential bottom could be close if the current cycle remains in a bull phase. This insight was derived from the Short Term Holder (STH) SOPR. SOPR, or Spent Output Profit Ratio, provides an understanding of the realized profits of all coins traded on-chain, with a focus on the short term.
Implications of Losses on Bitcoin Price
A STH-SOPR greater than 1 implies that the selling price of BTC exceeds the buying price, indicating a high volume of realized on-chain profits. However, when the metric falls below 1, it suggests that the selling prices are higher than the purchase prices, indicating realized losses on-chain. According to CryptoQuant, Bitcoin’s STH-SOPR has dipped to 0.98.
Historically, this implies that Bitcoin has either hit its bottom or is nearing it. Similar trends were observed in September 2023, 2021, and 2018. If this pattern continues, Bitcoin’s price could increase by 34.99% in less than two months.
Bear Phase Not Yet in Sight
Despite the recent drop to $54, 274, claims of a return to the bear market are not substantiated. This was confirmed using Glassnode’s Bitcoin Cycle Change Detector, which identifies transitions between bull and bear markets.
Unless nearly 100% of the total Bitcoin in circulation hits profits, a transition to a bear cycle is unlikely. Therefore, Bitcoin might reach a value between $76,000 and $80,000 before the quarter ends. However, this prediction could be invalidated if the market experiences significant selling pressure.
