• A key indicator of profitability in the Bitcoin market (the 30-day Simple Moving Average of the average Spent Output Profit Ratio, aSOPR) just turned negative, a bearish sign according to some analysts.
• If downside in the Bitcoin price extends, another key indicator of profitability in the Bitcoin market (30-Day Simple Moving Average of Glassnode’s Realized Profit and Loss (P/L) Ratio) could also soon turn negative.
• When these two indicators turn negative it indicates that on-chain picture is becoming less bullish.
Key Indicator of Bitcoin Market Profitability Turns Bearish
The 30-day Simple Moving Average of the average Spent Output Profit Ratio (aSOPR) recently fell back below 1, indicating that the Bitcoin market is now, on average, realizing losses in on-chain spends. This generally “aligns with both a healthier inflow of demand (to absorb profit taking), and a more constructive opinion of the asset”. The aSOPR only considers profit/loss on a per spent output basis and not coin volume, which provides an insight into market sentiment from various traders.
What This Means for BTC Price
If downside in the Bitcoin price extends further due to various factors such as Fed Chair Jerome Powell’s latest hawkish surprise, then another key indicator of profitability in the Bitcoin market will likely also turn negative – 30-Day Simple Moving Average of Glassnode’s Realized Profit and Loss (P/L) Ratio. When this indicator drops below 1.0 it signifies that realized profits are outweighing losses, meaning that larger traders have more influence than smaller ones.
Realized P/L Ratio Could Soon Turn Negative
The 30-Day Simple Moving Average of Glassnode’s Realized Profit and Loss (P/L) Ratio has been falling lately and if current rate continues then it could drop under 1.0 later this week. When this happens it means that only five out eight indicators tracked by analysts at Glassnode would be flashing a bullish sign – making the overall on-chain picture less bullish overall.
What Analysts Say About All This
Analysts at crypto data firm Glassnode explain that when these two key indicators turn negative it generally signifies weaker demand for bitcoin coming into play – something which is not good for its near term price action when considering other macro factors such as Powell’s hawkishness or already broken technical support levels etc..
In conclusion, two key indicators for measuring BTC profitability have turned bearish recently or are close to turning bearish soon – suggesting weaker demand for bitcoin coming into play which may lead to further price declines if other macroeconomic factors remain unfavorable too.