Research has shown that when Bitcoin (BTC) spot trades below $20,000 it experiences a new “cap” event involving buyers throughout the year.
In a market brief on September 29, online analytics platform CryptoQuant revealed a massive selloff of a large number of new inventors.
2021 bull market coins ‘hard to sell’
As BTC/USD approaches levels barely seen since 2020, miners are not feeling overwhelmed.
Analyzing the timeframes of the bitcoin exchange (SOAB), CryptoQuant contributor Edris showed that those who bought between April 2021 and April 2022 sold coins en masse – cheaper than they bought.
“Looking at the graph, it becomes clear that coins aged 6 to 18 months have been actively sold recently,” he concluded.
“These coins were bought between April 2021 and April 2022 at prices above $30,000. This signal means that many shareholders who entered the market during the 2021 market and topped the $30,000 mark have recently given up and exited the market with loss close to 50%.”
Bitcoin Exchange (SOAB) Influx Flow Chart (Screenshot). Source: CryptoQuant
Such events should not be taken as equally likely as they tend to occur at the bottom of a bear market. The only question is whether the last macro low in June at $17,600 will be the bottom line for that level.
“This type of concession tends to occur in the final months of a bear market, indicating a possible bottom formation in the near future.”
Profit Alert realizes profit potential
Exploring the Bitcoin Consumer Profit Ratio (SOPR) metric, fellow CryptoQuant contributor Caue Oliveira sheds light on another historical bear market trend that is repeating itself.
RELATED: Trader Warns Bitcoin Price ‘Big Dump’ After Crossing $20,000
SOPR divides the price paid for BTC by the price it is sold at. The resulting number hovers around 1, with lower readings indicating a bear market as investors are reluctant to incur net losses.
As of September 29, the company’s adjusted SOPR benchmark was just over 0.95, according to data from network analysis firm Glassnode.
The sensor is moving back towards 1 after seeing a local bottom in June, indicating that an important buying opportunity may have already arisen.
Oliveira wrote: “When we look at the cost structure of long-term network owners, as measured by the ratio of operating profit used … we can find the biggest selling points with losses.”
“Historically, these points have been the best risk-adjusted entries in the last two floors of a bear market.”
Looking ahead, the “point of maximum pressure” for long-term contract (LTH) holders is on the cards, he added, noting that selling pressure has eased as SOPR has risen a few centimetres.