Years from today, I suspect many of us will look back at what we achieved with an acute smile on our faces. A mixture of complicated motives, some selfish and others not so much, have brought generations of people from all over the world to topple the traditional financial system, and there’s nothing that can stop it — or at least, that’s what the data suggests.
Let’s dig in.
Adjusted SOPR Reset Opens the door for more upside
Bitcoin’s adjusted SOPR (Spent Output Profit Ratio) has reset to normal levels after surging for several months. Briefly, this means that coins which are exchanging hands between investors every (24-hour average) are no longer being sold at a profit. In order for aSOPR to go lower, investors and traders would have to be willing to sell bitcoin for fiat at a loss, which is unlikely given the state of the market.
The sharp reversion to the mean warrants attention and lends credence to the idea that higher bitcoin prices are not only possible, but likely.
The Great Bitcoin Long is Not Over
Despite this reset, some investors will understandably be wary, but the time for extra caution has not arrived yet.
If you zoom into the above NUPL (Net Unrealised Profit/Loss) chart, you’ll find that bitcoin has not entered the peak blue range just yet.
While history is no guarantee, current price-action and the above on-chain data resembles the mid-2017 market cycle (orange circle). The NUPL fell short of entering the blue range on the first attempt, and it took another 8 months of bullish price-action before bitcoin finally topped out.
As covered previously, various on-chain indicators suggest that there is much more room for growth for not just bitcoin but ethereum and DeFi altcoins — some of which have already quadrupled in value since our coverage in the telegram channel.
It’s not over until it’s over (and even then, it’s not over).
Bitcoin coils up in preparation for a big move
Technically, bitcoin is traversing within a bearish descending triangle structure and can continue to do so until the beginning of February without either direction giving way.
Earlier this week bitcoin attempted a move higher, which forced the relative strength index (RSI) to briefly break the downwards sloping trend. However, buying pressure did not last long and bitcoin is again testing the $30,000 level at the time of publishing.
Should this level breakdown with increasing volumes, then it would be likely for bitcoin to revisit the 20-weekly ema vicinity at $23,300.
On the flip side, bulls will aim to conquer the $33,000-$35,000 range, which would favour a re-test of the all time highs above $40,000. Such a move would in turn result in an attempt at $50,000 and beyond.
Given the underlying fundamentals and unambiguous on-chain data points, there is no doubt in my mind that any crash in bitcoin would be a short lived mass-liquidation event before new all time highs are printed.
Contrary to popular crypto Twitter sentiment, there is no guarantee this will happen.
Bitcoin has dropped just over 30% from the highs, which carries historical significance when seen in light or previous bull markets. As such, bearishly-biased traders are on thin ice from here on out.
Still, if bitcoin does drop to lower levels, then the buying opportunity will be too incredible to pass over.
Bulls lead the way.
Catch you next time.