Bitcoin metric hints at upswing
Bitcoin metric hints at upswing, Aave and Chainlink hit record prices
SOPR suggests selling pressure on bitcoin will ease, institutions also remain optimistic.
Earlier this weekend, Bitcoin (BTC) had hovered in a price range of US$33,500 – US$32,000, with today’s Sunday price just barely holding above the US$32,000 mark.
Some analysts warn that the recent pullback is fuelled by institutional investors slowly becoming „exhausted“. Selling pressure has been mounting from Asia in particular since 19 January.
Nevertheless, some institutional investors are holding on to the hope that Bitcoin will still climb to 100,000 US dollars in 2021. This is probably because sentiment among retail investors remains strong and new Bitcoin index funds (ETFs) have been applied for, which would create more investment vehicles for the crypto market leader.
Although Bitcoin is facing resistance at US$33,000, crypto statistician Willy Woo thinks there is a good chance it will move back up. As he explains, the „Bitcoin Spent Output Profit Ratio“ (SOPR) indicates that the price will take off again. The SOPR ratio puts the average selling price in Crypto Engine relation to the average buying price for recently traded BTC. If this relative value is greater than 1, selling is worthwhile; below this threshold this would no longer be the case, which is why the selling pressure will probably subside again for the time being (see chart below).
With regard to the SOPR, Woo explains:
„The SOPR is doing a reset. Bitcoin that have traded in the last few hours are no longer profitable on average. Investors would now make losses if they continue to sell.“
Woo believes it is unlikely that investors are willing to take losses to dump their bitcoin, which is why he sees a bottom forming at the current price level. Accordingly, it would go up again from here.
Altcoins and DeFi tokens on the rise
Some altcoins and cryptocurrencies from the Decentralised Financial Services (DeFi) space may be gaining, while the crypto market leader is currently struggling. Polkadot (DOT), AAVE, Curve DAO Token (CRV) and Sushiswap (SUSHI) have all gained between 5% to 7%.
The upswing in DeFi tokens is largely explained by increased trading activity on Decentralised Crypto Exchanges (DEX), as data from Dune Analytics shows that DEX trading volumes have steadily increased since July 2020, while total assets invested in DeFi now stand at a whopping $23.89 billion.