Bitcoin [BTC]: The two metrics that are critical to your inventory this week
- According to an analyst, BTC LTH SOPR had been trending below one since late May 2022.
- Mining activity on the BTC network was significantly affected by the king coin’s price.
On-chain assessment of the leading coin’s performance revealed year-to-date (YTD) rally in Bitcoins [BTC] price has caused the long-term used Output Profit Ratio (LTH SOPR) calculation to grow.
In accordance Glassnode Academythe SOPR calculation is used to understand the general market sentiment and analyze the profitability and losses that occur during a particular period of time for a particular crypto asset.
In addition, the indicator tracks how much profit has been realized for all coin transactions on the chain.
Read BTC’s price forecast 2023-2024
In the case of BTC, LTH SOPR offers insight into the psychology of long-term holders during a bear market. When the calculation is below one, it suggests that long-term owners are realizing losses and may be motivated to sell.
Conversely, when the metric is above one, long-term owners realize profits and may be encouraged to hold or accumulate more BTC.
CryptoQuant pseudonym analyst Largest trader noted that bearishness that plagued the 2022 trading year resulted in significant losses for market participants, including long-term investors under the LTH SOPR.
According to Greatest Trader, the LTH SOPR had been below one since the end of May 2022, indicating that long-term owners were steadily losing money.
However, with the overall upturn in the crypto market since the year began, “the metric started to recover and increased slightly due to the rise in Bitcoin’s price,” Greatest Trader found.
While this can be taken as conclusive evidence that a bull market was underway, the Greatest Trader opined that:
“Even so, it is still too early to call the $15.5,000 level the bottom of the bear market, as the recent impulsive rally may just be a bull trap.”
The analyst further cautioned that it was relevant for traders and investors to closely monitor the SOPR value in the short term to anticipate potential price direction and market sentiment.
Source: CryptoQuant
Keep your eyes on the miners
Mining activity on the BTC network is significantly affected by the price of the king coin and vice versa. According to CryptoQuant analyst Gaahminers are the only entity that requires an ongoing cost, such as running electricity, so their behavior is always tied to BTC’s price.
Therefore, the study of calculations such as the Puell Multiple, which compares the estimated 365-day average earnings with the miners’ short-term earnings, becomes crucial in determining the future direction of BTC’s price, as it provides insight into the miner’s behavior.
How much is 1,10,100 BTC worth today?
Gaah found that since the last local prize fund in November 2022, the average income of miners has doubled compared to the previous year.
This increase in average income can cover mining costs, reduce the need for miners to sell their BTC and in turn reduce selling pressure in the market.
According to Gaah, in the short term, multiple Puell values above 1.00 are essential to gauge the possible future behavior of miners.
If the average income continues to increase, miners may not need to sell their BTC to cover their costs. Therefore, it remains a key value to be aware of.
Source: CryptoQuant
