Spent output profit ratio is heavily hinting that hodlers should buy the dip on BTC, analysts say.
Bitcoin (BTC) speculators have been selling at a loss, and this week presents a golden buying opportunity, analysts say.
Data shows Bitcoin’s spent output profit ratio (SOPR) flipped negative for the first time in six weeks on Wednesday.
SOPR says “buy the dip”
A classic buy signal, negative SOPR implies that sellers have been dumping BTC at a loss, and the oversold market, therefore, is ripe for longer-term hodlers to profit from cheap coins.
The last time SOPR went negative was July 20, right before Bitcoin took off to reclaim $50,000.
“Spent Output Profit Ratio went negative (green) yesterday as on-chain speculators were selling at a loss,” Philip Swift, an analyst at trading platform Decentrader, summarized to Twitter followers Thursday.
“Paints a v.similar picture to funding rates in recent months in that a lot of forced selling took place over the summer making this more of a buy-the-dip opportunity now.”
Bitcoin SOPR chart. Source: Decentrader
“Good news” for Bitcoin bulls
As Cointelegraph reported, research has highlighted Tuesday’s BTC price dip as coming from overleveraged traders who could not withstand selling pressure from young whales.
After the market cleared out those players, optimism has returned over more sustainable price gains.
For on-chain monitoring resource Whalemap, meanwhile, SOPR data likewise hints at the possibility of higher levels returning.
“SOPR around 1 in an up-trending market is good news,” staff commented on the metric’s current readings.
In private comments to Cointelegraph, the Whalemap team added that “a little bit more sideways” should first characterize the market before upside ensues.