A new report by the cryptocurrency exchange Bitfinex revealed that the latest on-chain metrics and investor behavior suggest the crypto market may be ready for the next bull run.
In the weekly edition of the Bitfinex Alpha reportthe crypto exchange noted that Bitcoin’s Spent Output Profit Ratio (SOPR) and Net Unrealized Profit and Loss (NUPL) indicators have moved into the green, showing that almost all BTC trades have been profitable since the leading asset breached the $29,500 mark.
On-Chain Metrics and Investor Behavior
As bitcoin’s price hovers around the $30,000 range, the asset’s SOPR has remained above one, showing that market participants are confident in their spot positions and do not have to sell at a loss. They are keen on future price appreciation and believe their positions would either realize partial profits now or hold for higher.
The SOPR gives insights into the profitability or loss of coins moved on-chain. A SOPR greater than one means that investors are, on average, selling their BTC at a profit. If it is less than one, then they are selling at a loss.
The SOPR has been above one for roughly two weeks since bitcoin soared past the $29,500 level. These signals that most market participants expect further price appreciation and are unwilling to sell at a loss, like in a bull market.
“This generally keeps the SOPR value > one during bull markets, because there is very little supply coming onto the market at breakeven prices. In both bull and bear markets, the SOPR value tends to find support and resistance at a value of one, thus, a sustained stint above one as we are in now would signal we are in an early bull market stage,” Bitfinex said.
A Tussle Between Bulls and Bears
While Bitcoin’s SOPR hovers above one, the asset’s order flow data suggests a tussle between bullish and bearish sentiments. On-chain data indicates strong buying interest is accumulating largely by limit sell orders, a balance that has formed a zone that could determine BTC’s direction in the coming weeks.
On the other hand, several on-chain trackers have discovered a significant increase in miners sending bitcoins to exchanges. Such activity is usually seen in two scenarios – during a bear market capitulation or the early stages of a bull market.
However, on-chain data indicates the miners’ move is directed at derivative trading activities like using the BTC as collateral for their positions rather than directly selling on spot markets. This prevents any immediate bearish influence on prices.