Recently, the world’s first cryptocurrency, Bitcoin failed to reclaim the $25,000 price level and is maintaining the momentum around the $24,000 area.
Over the past seven days, Bitcoin is up 6%, while it is down 1% on the daily chart. Hence, it suggests a consolidation period.
At the time of writing, Bitcoin is selling at $24,063 after a fall of 0.37% in the last 24hrs. The flagship currency is always known for making an opposite move to what the expectation is.
However, two on-chain analysis of Bitcoin, Output Profit Ratio (SOPR) spent and Realized HODL (RHODL) are pointing to a trend reversal.
Bitcoin SOPR
Spent Output Profit Ratio (SOPR) is basically an on-chain indicator which suggests whether the market is in profit or loss. If the readings are above one (black line) it says that the market is in profit and if it’s below one the market is in loss.
In January 2018, SOPR fell below a (black circle), indicating that this was the end of a bullish trend. Then 11 months later in December the bottom was hit. SOPR broke again in May 2021 (red circle) and reached 0.928 in June.
At the moment, on August 5th (red arrow) made an attempt to move above one, but it failed. Hence, the indicator is all set to make another attempt to break. If SOPR manages to break above one, it confirms that the bottom has occurred.
RHODL Ratio
Next, the RHODL ratio is a metric formed by the ratio of a week and 1-2yrs of the HODL wave band. A mark above 50,000 (highlighted in red) suggests that a significant portion of the BTC supply is held by short-term holders.
At present, the RHODL ratio is above 350 positioned at 360 and this is marked as oversold. It is important to note that on August 11, the ratio had slipped below 350 before moving upwards.
It has been a record that whenever there is a downward and upward marking near 350, the market is at a bottom. If the marking continues, it shows that the ratio has managed to bounce up and confirms the downside.
