- Bitcoin’s aSOPR stood at 1.03 at the time of writing.
- As the price approaches 1.08, the currency is at risk of a price drop.
Bitcoins [BTC] The price could be due for a correction as the value of key on-chain metric trends towards historically ‘dangerous’ levels, CryptoQuant analyst Woo Minkyu found in a new report.
Minkyu assessed BTC’s Adjusted Spent Output Profit Ratio (aSOPR) using a 200-day moving average and found that the move towards 1.08 put the leading coin at risk of correction.
BTC’s aSOPR measures the profit or loss realized when the coin is spent by its holders. An aSOPR value above 1 means that coins are sold at a profit overall.
Conversely, a value below 1 indicates that investors are selling at a loss.
At the time of writing, the coin’s aSOPR was 1.03, meaning BTC holders are currently booking profits from the sale of their coins.
AMBCrypto reported earlier that despite significant resistance at the $71,000 price level, more than 87% of BTC’s circulating supply is held profitably.
According to Minkyu, an increase in BTC’s aSOPR value towards 1.08 indicates a potential risk of a price decline.
“However, historical data shows that when this indicator approaches 1.08, Bitcoin prices tend to enter a correction phase. Considering previous cases where similar patterns were observed, there is a possibility that the current situation may follow the same trend,” the analyst noted.
Bitcoin continues to evolve within a certain range
At the time of writing, BTC exchanged hands at $64,584. It has been moving within a horizontal channel since May 20, fluctuating between resistance at $71,926 and support at $64,529.
A horizontal channel is formed when the price of an asset consolidates within a certain range over a period of time. This narrow swing occurs when a relative balance between buying and selling pressure prevents the price from moving sharply in either direction.
BTC’s declining Average True Range confirms the consolidation phase. AMBCrypto found that the value of this volatility marker has fallen 28% since May 20.
This indicator measures market volatility by calculating the average range between high and low prices over a certain number of periods.
When it falls, it indicates lower market volatility and indicates that the asset’s price is moving within certain limits.
Although BTC’s trend is currently within a certain range, the bearish influence of the market is still significant. Readings from the coin’s Directional Movement Index (DMI) revealed this.
Source: TradingView
Read Bitcoin’s [BTC] Price forecast 2024-25
At the time of writing, the coin’s negative directional index (red) was above the positive index (green).
The DMI of an asset measures the strength and direction of an asset’s price movement. When set up this way, it indicates that the bearish trend is stronger than the bullish trend. This suggests that there is a greater chance of a downtrend than an uptrend.