This on-chain metric suggests Bitcoin price correction is unstoppable

  • Bitcoin tumbles to $30,000 in search of robust support after losing support at the 200 SMA.
  • The SOPR is heading fast towards one, hinting at a continued breakdown.
  • Bitcoin is likely to present a buy the dip opportunity, allowing more investors to join the market.

Bitcoin is trading sub $30,000 after a hurricane-like gust of wind swept across the cryptocurrency market. The flagship digital assets had been rejected at $38,000, giving way to losses that took a pit stop at $34,000. However, the bearish outlook grew stronger, forcing BTC to test former support at $30,000.

According to the Spent Output profit Ratio (SOPR), an on-chain metric by Glassnode, the correction is bound to continue. Price action below $30,000 could bring the support at $28,000 on the test, while declines are likely to extend to $25,000 as predicted on Thursday.

Bitcoin SOPR predicts extended breakdown

Markets are psychological, hence the need to understand why certain things occur. On-chain metrics have recently become fundamental tools for understanding bearish, consolidation, and bull periods.

The SOPR is an indicator measured from network spent outputs. It is arrived at by dividing the realized value (USD) by the value at creation (USD) of an output (price sold/price paid).

A SOPR value higher than one suggests that all holders of spent outputs are transacting at a profit. On the other hand, any other value means that they are at a loss at the time of transacting. Usually, people sell when they are in profit.

Bitcoin SOPR chart

Bitcoin SOPR chart

Currently, the SOPR is declining towards one, which means less BTC is being transacted on-chain at extreme profits. The SOPR is likely to continue with the pullback eyeing the midline.

As explained recently, Bitcoin could also be nearing a reversal and would present a buy the dip opportunity. Realize that a SOPR of less than one in bull markets pushes the supply down, which leads to an increase in the price.

Bitcoin Adjusted SOPR chart

Bitcoin Adjusted SOPR chart

Bitcoin is exchanging hands at $30,500 after testing the former buyer congestion zone at $30,000. Various critical support levels have already been lost, including the symmetrical triangle support and the 200 Simple Moving Average on the 4-hour chart.

A breakdown under the lower trendline of the triangle precisely point’s Bitcoin to $25,000, as predicted on Thursday. Therefore, the technical perspective concurs with the SOPR, hinting at a continued correction before a significant reversal comes into the picture.

BTC/USD 4-hour chart

BTC/USD 4-hour chart

It is essential to realize that Bitcoin is trading under all the applied moving averages. Therefore, overhead pressure is likely to soar as odds for a bearish impulse surge.

Simultaneously, the Moving Average Convergence Divergence or MACD adds credibility to the bearish outlook by first diving into the negative region. Secondly, the 12-day moving average slipped below the 26-day moving average.

On the contrary, holding above $30,000 is likely to call for stability in the market, giving investors and bulls ample time to buy the dip. An increase in buying pressure would eventually catapult Bitcoin in a trajectory heading to $40,000.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Crypto bulls unfazed by flash crash

Bitcoin price action initially shakes off strong selling pressure, finds buyers at support, then resumes some selling pressure. Ethereum price action mixed post-all-time high rejection. XRP price awaits its own bullish breakout and an opportunity to outperform its peers.

More Cryptocurrencies News

MATIC price ready for new all-time highs as $188 million flow into Polygon

The total number of transactions on Polygon network dropped nearly 15% due to a rise in transaction fees over the past week. This hasn’t negatively impacted the network as the number of unique daily active users remained stable. 

More MATIC News

AVAX price offers a bullish opportunity before Avalanche hits new all-time highs

Avalanche (AVAX) price has seen a bullish outbreak on Thursday after it broke out above – and then retested – the red descending trend line at $61.62. With even more buyers and bulls coming in, expect a run towards new all-time highs at $81.

More AVAX News

XLM price building base for bullish breakout

Stellar bulls are in the last phase of completing a bullish triangle. As XLM price is getting squeezed against the base ($0.40), expect a quick breakout of 12%. After taking a breather, expect another 10% of profits to follow. 

More Stellar News


Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast