Crypto news: Investors selling at a loss – BTC in bear grip?
07:37, 28 January 2022
As bitcoin (BTC) continues to trade some 48% below its all-time high reached in November, most investors, who are currently selling the coin, are selling it at a loss, on-chain analysis by cryptocurrency exchange Kraken suggests.
While investors parting with their coins at a loss would hint at a bearish mode in the market, authors of the Kraken report point out that market participants were selling BTC at a loss on a bigger scale in the last retracement cycle.
During that cycle, BTC’s price had dropped from $65,000 in May 2021 to $30,000 in July 2021, which was ultimately followed by a bounce.
“Recent market activity may prove to be a healthy retracement in the broader macro trend rather than a full-blown reversal,” writes Kraken’s analyst.
‘Not out yet’
Kraken Intelligence broke down BTC’s ‘spent output profit ratio’ (SOPR) metric, which is used to gauge whether the market is in a bull or bear pendulum.
An SOPR below 1 indicates that investors are selling at a loss, suggesting that a bottom is near. An SOPR equaling 1 suggests that investors are selling at or around the price that they bought, indicating that they are uncertain, whereas an SOPR above 1 suggests that investors are selling most coins for profit, signalling that a top may be close.
Bitcoin’s SOPR is currently below 1, indicating a bearish mode, as the price continues to drop, according to the Kraken report, which added that the coin’s SOPR is much higher now than during the last retracement.
“This suggests that while the SOPR is currently signalling bearish, on-chain data painted a much worse picture during the last similar market correction, after which BTC managed to make a strong comeback.”
“In other words, don’t count BTC out just yet.”
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Quote of the day
Shares in Apple, the world’s biggest firm by market capitalisation ($2.6trn), jumped after its chief executive Tim Cook, speaking at the company’s earnings conference call on Friday, showed interest in the metaverse.
Top coins by market capitalisation
As of 10:45 GMT
- Bitcoin (BTC) was flat, adding 0.44% to $36,644.43
- Ether (ETH) was down 1.19% and trading at $2,402.89
- Binance coin (BNB) added 4.45% to $385.60
Winners and losers
- Helium (HTN) is the only coin in the top 50 that is in positive territory over the last week bar stablecoins. HTN added 1.81% in the period
- Terra (LUNA), harmony (ONE) and axie infinity are among the coins that saw the biggest battering, losing 34.18%, 33.09% and 30.48% respectively
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