The leading cryptocurrency Bitcoin continues its struggle to get 30 thousand dollars. According to analysts, Bitcoin has created a ‘cup and handle’ model. Also, an on-chan metric shows that BTC is ready to start its bull run. So, what do these mean for leading crypto?
Bitcoin has created a massive ‘Cup and Handle’ model
Bitcoin is developing a nine-month ‘cuo-and-handle’ pattern on weekly candles for the first time since 2019. The ‘trophy’ is one of the tallest trophies we’ve seen in crypto. But the structure is largely there. We form the left side, which began with a sharp decline in June. Then there’s a lower bottom to give it a curvy U shape in November. On the right is a sharp jump in March. Also, no one can predict whether the last few weeks have really formed a ‘handle’.
A cup and handle is one of the most bullish patterns in technical analysis. Because it means the bears are out of ammo. The bears were strong in June and drove the price down significantly. However, we saw more sideways movement than price drops afterwards. Thus, we reached the climax with the two-month long horizontal course between November and January.
As the bears could no longer pull the price down, the bulls tried successfully and doubled from $15,000 to $30,000. The bears then tried one last time and formed the handle. If it really turns out to be a ‘handle’, that would be final confirmation that the bears have nothing left. At this point, the bulls attack from a clear path. In this case, BTC may go up to $50,000. But naturally that depends on whether it actually happens or not.
One metric points to an upcoming bull market in BTC!
Recently, a specific Blockchain indicator has changed. This indicated that the sale of Bitcoin units held for a certain minimum time frame would turn into profit. Data from Glassnode today showed that the seven-day average of the long-term holder’s spent output profitability ratio (LTH-SOPR) exceeded one for the first time since last May.
According to Glassnode Academy, SOPR measures how profitable it would be to sell the cryptocurrency by looking at Bitcoin units carried on-chain. When the value of this metric rises above one, it means that the sale of the above-mentioned units will bring profit, while when the value is less than one, such a transaction will create a loss. According to Glassnode Academy, besides measuring profitability, this indicator also gives market watchers insight into sentiment.
How do analysts interpret the metric?
In an article by Omkar Godbole, he states that when the LTH-SOPR value went from less than one to greater than one in November 2015, May 2019, and May 2020, it preceded BTC’s bull run for several years. Analysts gave mixed answers to questions about LTH-SOPR and its implications.
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, said, “It’s another way to measure sentiment. When SOPR is above 1, it means that coins moving in that period are profitable. A SOPR below 1 means that people at a loss are forced to sell. A turn of 1 and above means long-term holders are finally starting to turn green. So it could also indicate a shift in sentiment where these organizations are starting to reduce the selling pressure and even buy more. However, we cannot say that the indicator predicts a rally. It reveals a data point that often coincides with a change in sensitivity,” he explains.
Tim Enneking, managing director of Digital Capital Management, calls Godbole’s assessment “correct”. But he says, “It is not LTH-SOPR that is pushing BTC up and the crypto market in general. Likewise, on the downside, he states that LTH-SOPR is indicative of a cause rather than the cause itself. Moving from this, Enneking said, “There are four factors that cause LTH-SOPR to increase and BTC and crypto prices to rise. These are: Peak interest rates, BTC’s halving, FTX’s ‘forced’ capitulation, and crypto bottoming in mid-November, and above all, the deterioration in equities and BTC correlation.”
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