According to Glassnode analysts, Bitcoin will continue to rise as investors are reluctant to close positions and continue to buy BTC.
Further price declines will leave many investors in the red depending on when their assets were last moved online, according to a report by analyst firm Glassnode on Bitcoin’s Adjusted Spent Output Ratio (aSOPR).
Although many investors now have unrealized profits on this indicator, Glassnode interprets the data as optimistic and states:
“For the SOPR to decline, investors must be willing to sell at a loss, which is unlikely given the current market conditions.”
Glassnode describes SOPR as a measure of the coin’s profitability ratio based on the price of BTC when it was last moved within the network. Since aSOPR is an on-net indicator, BTC circulation on centralized exchanges is not taken into account.
While the SOPR usually hovers around the 1 level, the extreme bullish momentum of recent months has led to a sharp jump in Bitcoin’s aSOPR above 1.15 in late December and the first half of January. However, in a bull market, the aSOPR value does not fall below 1, as traders do not want to sell at a loss.
The aSOPR chart assumes that the current retracement is coming to an end. BTC corrected 31% from peak to low when it fell just below $ 29,000 on January 22nd. Bitcoin is currently trading at $ 31,879.
Yesterday Glassnode also reportedthat 2.3 million BTC or 12.6% of bitcoins in circulation were moved within the network when the crypto asset was trading above $ 30,000, marking this activity as “bullish”:
“This is very important given that BTC has surpassed $ 40,000 this year alone. This suggests that investors are investing and are therefore confident in further price increases.”
Recall that according to Skew, Bitcoin volatility recently rose to the level of March 2020, when all markets collapsed at the beginning of the pandemic. Previously, volatility reached its highest levels during periods of a bull market.
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