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Bitcoin (BTC), the first and largest cryptocurrency by market capitalization, is at a critical juncture, as key metrics signal an imminent shift in momentum and profitability.
According to Glassnode, Bitcoin's STH-SOPR (7D SMA) is currently testing the breakeven level of 1.0. The Spent Output Profit Ratio (SOPR) is calculated by dividing the realized value (in USD) by the created value (in USD) of a spent output. Simply put, this refers to the price sold divided by the price paid. The Short-Term Holder SOPR (STH-SOPR) is an indicator that only considers spent outputs less than 155 days old and is used to examine the behavior of short-term investors.
Historically, Bitcoin's STH-SOPR (7D SMA) breaking above 1.0 confirms a shift in momentum, while failure to do so often results in renewed sell pressure. The last attempt in early January was successful but shortlived.
To assess the probability of reclaiming 1.0, Glassnode examines BTC's STH-SOPR Multiple, which compares short-term profitability trends. This indicator is currently in the red zone, implying that short-term holders (STHs) have been realizing more losses as of late.
Gamza KhanzadaevCombining these two indicators, Glassnode arrives at a logical point in Bitcoin's next move as regards Bitcoin's STH-SOPR. Glassnode infers that with STH-SOPR struggling at breakeven and the SOPR multiple signaling negative momentum, the probability of rejection at 1.0 seems elevated.
On the other hand, if Bitcoin's STH-SOPR indicator breaks above 1.0, this would signal a profitability shift.
Markets on edge ahead of key releases this week
At press time, Bitcoin was down 0.15% in the last 24 hours to $95,809, extending its sell-off from Sunday. The broader crypto market remains down amid continued profit-taking following the Bybit hack and macroeconomic concerns.
Tomiwabold OlajideInvestors are expecting a packed week of economic data, which includes the data on the GDP growth rate scheduled for Thursday's release, which will offer insights into how the U.S. economy performed in Q4, 2024.
The most anticipated data for the week is the personal consumption expenditure index, which will be released on Friday at 8:30 a.m. ET. The Federal Reserve's favored inflation gauge has a significant influence on the Fed's rate-cutting decisions.
Markets have interpreted the latest signals as implying that the Fed might keep interest rates unchanged - most likely until the summer.
Dan Burgin
Vladislav Sopov