Bitcoin metrics warn of $21K profit-taking as decade-old BTC wakes up
Sleeping for up to a decade, Bitcoin (BTC) wakes up this week as BTC price action sees six-week highs.
Data from the analysis firm Glassnode on the chain shows that some of the oldest “dormant” bitcoins are returning to circulation.
BTC is trending out of hibernation
As BTC/USD stages something of a comeback in the second half of October, hodlers are changing their behavior after a year-long bear market.
According to Glassnode, the number of bitcoins previously sitting in their wallets for 7-10 years, but not active again, reached a month high on 29 Oct.
This is actually the latest in a series of such peaks, with the previous one set on 1 October.
Additional figures reveal that the unused transaction outputs (UTXOs) in profit hit a one-month high of over 73% on October 28, aiming to eclipse the levels from September.
Glassnode shows that Bitcoin that is moved quickly is done at a profit, rather than at a loss.
SOPR nails through the key area
The data reinforces the theory that there is a growing desire to drive profit-taking, even among Bitcoin’s most experienced hodlers, at current prices.
Related: Capitulation or profit-taking? Bitcoin whale moves 32K BTC dormant since 2018
Such surplus activities can increase considerably, even if the spot price only gives modest growth, says an important network survey.
The latest readings from Bitcoin’s Spent Output Profit Ratio (SOPR) show that further price gains will place BTC/USD in classic profit-taking territory.
The SOPR essentially shows the extent to which the BTC supply is sold at a profit or loss. By hovering around 1, the ratio tends to be negative during bear markets, and when it crosses 1 while moving higher, it signals an increase in supply, which in turn can affect price action.
“In a bear market, everyone is selling or waiting for the break-even point to sell,” creator Renato Shirakashi explained in an introduction to the calculation in 2019.
“When SOPR is close to/greater than 1, people start selling even more, as they reach break-even. With a higher offer, the price plummets.”
As Cointelegraph reported, some on-chain signals suggest the big picture is more nuanced.
Binance, the largest exchange by volume, this week saw its largest ever BTC balance reduced, indicating that users withdrew over 55,000 BTC in a single day.
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