Bitcoin (BTC) Market Not Yet Topped as SOPR Creeps Up, Cycle Indicators Suggest

Recent economic data and widespread profit-taking may have stalled an early bitcoin (BTC) rally, but on-chain metrics tracking investor behavior suggest that buying at current price levels could benefit those seeking an entry into BTC markets.

On Friday, bitcoin’s Spent Output Profit Ratio (SOPR) had risen to 0.987, indicating that investors who have held bitcoin for less than six months are selling at a loss, according to data from Glassnode. Historically, this scenario has often preceded price recoveries, suggesting a potential buying opportunity.

Other closely watched cycle indicators, such as the Market Value to Realized Value (MVRV) and the Puell Multiple, as well as a short-term investor ratio of 60%, indicate that the market has not yet reached its peak, and this week’s correction does not appear to signal the end of the bull cycle, according to CryptoQuant contributing analyst Mac_D.

“As short-term investors experience more pain, it often presents better opportunities for accumulation,” Mac_D stated in a Thursday post. “If there is further decline from the current price, smart investors will likely accumulate the coins sold cheaply by short-term investors. Therefore, selling coins at this juncture might prove to be a very unwise decision.”

SOPR measures the profit or loss of spent bitcoin outputs by comparing the value of coins when they were last moved to their value when they are spent again. The short-term SOPR specifically focuses on coins that were moved within a relatively short time frame (less than 155 days) and can be used to gauge market sentiment, where a value less than 1 might indicate capitulation or a market bottom, potentially signaling a good time to buy.

The MVRV compares Bitcoin's total market capitalization (market value) to its "realized cap," which values each Bitcoin at the price at which it last moved. It's used to gauge whether Bitcoin is overbought or oversold, helping to predict potential market tops or bottoms.

BTC was trading near $95,000 during European morning hours on Friday after a drop in U.S. hours brought it to around $90,000 late Thursday, a 10% decline from a weekly high above $120,000.

Fresh economic data caused U.S. Treasury yields to spike on Thursday, leading to a decline in equities and a concurrent drop in risk-on assets like bitcoin. The latest Institute for Supply Management (ISM) report on U.S. service providers was stronger than expected, with the prices-paid measure hitting its highest level since early 2023.

Traders are watching for the release of U.S. non-farm payrolls (NFP) later Friday before positioning further, as CoinDesk reported. Strong NFP numbers indicate a healthy economy, hinting at possible interest rate hikes, which tends to be bad for risk assets like bitcoin.