Incoming Bullish Signal Spotted On Bitcoin’s On-chain metrics

The Bitcoin on-chain data is showing that sentiment is highly bullish in the current market. The Short-term Output Profit Ratio (SOPR) metric, which indicates the behavior of market participants, has just flashed a highly bullish signal.

Analysts are comparing the metric’s current level to market conditions from last year that marked the bottom of the bear market.

SOPR flashes a bullish signal as Short term holders have been making profits

Per data from Glassnode shared by analysts, the Spent Output Profit Ratio (SOPR) has been showing more similarities with the summer of 2021 that they conclude are bullish.

The metric is an on-chain analysis indicator that gives an overall view of the behavior of Bitcoin market participants.

When the metric is above a value of 1, short-term holders (STHs) are selling their bags at a profit and indicating that bullish sentiments are returning to the market. Conversely, when the value of SOPR drops below one, STHs are selling at a loss.

At the moment, the metric is nearing levels seen in 2021 that marked a bear market reversal. Pseudonymous market analyst, “SwellCycle,” pointed out these similarities between the two periods, noting that the value has recently returned above a value of 1 as it did back in 2021 between May and July.

This indicates that the bottom of the market is in, and coincides with trend reversal sentiments in the Bitcoin market, he said.

However, he warns that the bullish signal can only be confirmed if Bitcoin’s price finds support.

 However, lack of support would quickly have the entire move resemble the prior bear market scenarios below, he said.

The analysis was also confirmed by “TheRealPlanC,” who noted that SOPR was one of the metrics “screaming that the bottom is in” for Bitcoin and the crypto market.

Bitcoin price performance on the day.
Despite the bullish signals, the price of Bitcoin has traded down on the day. Bitcoin (BTC) is down around 3.70%, trading at $42,200. This is a significant local high of around $45,500 one month high reached during the week.

Analysts note that the price has been reacting to several factors. These include geopolitical tension in Russia and growing inflation, and concerns over Fed policy adjustment in the US.