According to This Metric, Bitcoin Bull Run Is Just Starting! Latest On-Chain Data!

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• On-chain data shows that Bitcoin SOPR has not yet reached the high levels associated with past heated bull market periods.
• When the indicator value is greater than 1, it means that the average holder in the industry is currently selling their coins at a profitable rate.
• During the bear market of 2018, BTC SOPR fell to significantly low values below 1 after the November 2018 crash.

According to the analysis of the on-chain metric on Bitcoin by the analytical firm, it indicates that the bull season is just beginning.

Analysis of Bitcoin’s SOPR Metric

On-chain data shows that Bitcoin SOPR has not yet reached the high levels associated with past heated bull market periods. In a CryptoQuant Quicktake post, an analyst explained how BTC price has been influenced in the last few years.

The on-chain indicator that best represents Bitcoin trader psychology according to CryptoQuant is the “Spent Output Profit Ratio” (SOPR). SOPR fundamentally tells us whether BTC investors are selling their coins (or more precisely, transferring them on the blockchain) at a net profit or loss.

When the indicator value is greater than 1, it means that the average holder in the industry is currently selling their coins at a profitable rate. On the other hand, when this threshold is below 1, it implies that there is dominant selling at a loss among participants.

Naturally, when the value of SOPR is exactly 1, it might just be maintaining balance in market sales overall, as the profits earned exactly offset the losses. Now, there is a chart below showing the trend that Bitcoin SOPR has followed in recent years:

In the chart above, the analyst marked the pattern that Bitcoin SOPR has followed in recent years. During the bear market of 2018, BTC SOPR fell to significantly low values below 1 after the November 2018 crash. The price at that time also found its bottom simultaneously with these lows in this metric.

Bitcoin Performance After the FTX Incident

In the bear market of 2022, BTC investors were still in the red by participating in a relatively low selling at a loss until the collapse of FTX, and holders finally capitulated to a significant extent. So far, it seems that the dip after the FTX collapse is indeed the bottom for the current cycle, as it has doubled the value of BTC since then. The pattern of this dip is also compatible with a kind of pattern in the 2018 bear market.

Between these two major dips, there was also a large-scale liquidation event in 2020, but this collapse was mostly an anomaly due to the unexpected emergence of the COVID-19 pandemic. As can be seen from the chart, the trend during rallies is generally the opposite: investors start selling at large profits, and a peak is reached when profit-taking reaches extreme levels.

Earlier this year, BTC SOPR spiked to high levels when it reached its local peak in April. However, since then, the indicator has remained relatively calm after a slight profit-taking following the last leg of the rally.

“In the current market, there will be many corrections and declines until we reach the peak of the bull market, but psychologically, it seems there is still enough time for the second half of the bull market,” says CryptoQuant.