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Crypto news: Investors selling at a loss – BTC in bear grip?

By Daniela Ešnerová

07:37, 28 January 2022

Bears and bulls with a candle chart representing market movements
Don’t count BTC out yet, says analyst – Photo: Shutterstock

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. 

UNI/USD

10.89 Price
+1.920% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.08964

ETH/USD

3,106.86 Price
-0.230% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 6.00

BTC/USD

51,593.20 Price
-0.460% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

ADA/USD

0.59 Price
-0.520% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.00646

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.

We see great potential in this space and we are investing in that direction…We are always exploring new technologies and I have talked a lot about how exciting it is to find that technology right now.

Top coins by market capitalisation

As of 10:45 GMT

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

Markets in this article

BNB/USD
Binance Coin / USD
392.44 USD
-2.53 -0.650%
BNB/USD
Binance Coin / USD
392.44 USD
-2.53 -0.650%
BTC/USD
Bitcoin / USD
51593.20 USD
-235.8 -0.460%
ETH/USD
Ethereum / USD
3106.86 USD
-7 -0.230%

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Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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