The Bitcoin Spent Output Profit Ratio suggests that the lows are already in for this recent pull-back...
There seems to be no shortage of people out there thinking that bitcoin needs to go lower first before it can start going higher again.
In fact, you can probably find many of them reading this blog, yep I'm looking at you @edicted and @frot.
However, there is yet another metric/indicator suggesting that they may be waiting quite a long time for their drop back to the old highs ($20k).
The Spent Output Profit Ratio (SOPR) is flashing a buy signal for the market as it has dropped back to a reading of 1.
Check it out:
(Source: ~~~ embed:1353061615101382658/photo/1) twitter metadata:d29vbm9taWN8fGh0dHBzOi8vdHdpdHRlci5jb20vd29vbm9taWMvc3RhdHVzLzEzNTMwNjE2MTUxMDEzODI2NTgvcGhvdG8vMSl8 ~~~
For some context, the Spent Output Profit Ratio measures the profit ratio of bitcoin moved on-chain. It is calculated from spent outputs with a realized USD value being divided by the value at the creation of the output.
In layman's terms, it's the price sold divided by the price paid.
The idea is that when less bitcoin is currently in profit and can only be sold at a loss the price tends to move higher from there.
Cool, so why should we pay attention to this metric?
Based on historical patterns, when the SOPR metric falls to 1 or lower during a bull market, that has typically marked a local bottom.
Which is exactly what we are seeing right now.
The SOPR hit a value of 1 the other day and if history is any indication, the price should be heading higher in the not too distant future.
As mentioned above, a drop below 1 signals that bitcoin holders are cashing out their holdings at a loss during a market downturn, while a value above 1 indicates that the owners of the spent outputs are in profit at the time of the transaction.
When the ratio drifts back towards 1 in a bull market, it's time to buy and inversely when the ratio drifts up towards 1 in a bear market, it's time to sell.
While this does not guarantee that bitcoin cannot drop further, it does put another feather in the cap of those thinking the lows are likely already in for this most recent pullback.
Endowments getting into Bitcoin?
In other news, it appears Harvard, Yale, Broan, and the University of Michigan are all buying bitcoin right now...
More on that can be seen here:
Most of the specifics are unknown at this point, but the potential of them getting involved is certainly huge.
From the Coindesk article:
"Harvard’s is the largest university endowment with over $40 billion in assets. Yale has over $30 billion, Michigan has about $12.5 billion, while Brown holds $4.7 billion. It is unknown how much each fund has allocated in crypto but it is likely a fraction of percent of their total assets."
Bitcoin may dip lower than those $29k lows, though I suspect they won't, but either way it is likely to be significantly higher in the coming months.
If we get another dip it's probably a good spot to be picking up some bitcoin, if we don't, hopefully you were buying on this most recent one.
With the Bitcoin for Corporations Event now roughly a week away, the dip may not last long...
Stay informed my friends.
-Doc
Posted Using LeoFinance Beta
This is the key takeaway, I think. Thanks for the education!
Posted Using LeoFinance Beta
Yep exactly. All you really need to know is that when it hits 1, it's time to buy in a bull market, and we just hit 1...
I was hoping it would come back around $ 20,000, but Bitcoin doesn't seem to want to
Yea I mean if we are talking about what we hope happens, I mean we can all hope it goes back to $1k per coin, probably not going to happen though. :)
get it while u can
@edicted has actually been pointing to a 190% run or something like that similar to the 2013 chart I think. It's all a bit Greek to me. I just listen to all of you folks, smile and nod. I pick up tidbits here and there as I can and try to leave a comment that makes me sound a little smart :) I did read a good news story about banks getting pretty close to being given the green light on stablecoins. That could be good news?.
Posted Using LeoFinance Beta
He might be, though he is awful bearish in the short term. Seen several calls of a drop to $20k before making much of a move higher from him.
SOPR looks like a useful tool for any crypto holder (especially BTC) to keep in mind, especially these days.
It's too late for me to upvote this post, so please accept this slice of !PIZZA instead.
Posted Using LeoFinance Beta
PIZZA Holders sent $PIZZA tips in this post's comments:
@magnacarta(1/10) tipped @jrcornel (x1)
Learn more at https://hive.pizza.