Bitcoin sell-off over? For the primary time in 5 months a powerful “Purchase the Dip” sign flashes
Bitcoin (BTC) price fell for the third time last week on February 28, to the key support level of $ 44,000 to $ 45,000.
BTC / USD 1 hour candle chart (Bitstamp). Source: trade view
The BTC / USD pair briefly fell below $ 44,000 on Bitstamp before reducing some of the losses and falling back above $ 45,000 at the time of writing.
“Complete peace” for SOPR, financing rates
Some analysts have pointed to an increase in miners’ sales as the reason for the recent price drop.
It’s a whale war and you know who’s in real power.
US institutional investors
– Coinbase Outflow = STRONG BUY
– Coinbase Premium = BUY
– BTC Reserve = BUY
– Stablecoin Inflow TXs = BUY
– Miner Outflows = SELL
– Miner to exchange flows = SELL pic.twitter.com/fhVBp8qocm
– Ki Young Ju @ (@ki_young_ju) February 28, 2021
Fortunately, the third retest of this important level of support could have a silver lining for the bulls. Data analytics resource Glassnode found that the daily Bitcoin Spent Output Profit Ratio (SOPR) has been “completely reset”.
The SOPR essentially shows whether the services consumed are in profit or loss at the time of the transaction. This key metric went negative for the first time since September 2020. In other words, investors are now moving BTC at a slight loss on average, suggesting that profit-taking has declined, according to Glassnode.
“Overall, we posted a net loss in the chain of $ 243 million yesterday,” added the analysts.
“That is the lowest daily value since April 2020.”Bitcoin funding rates. Source: Bybt.com
Popular trader Philip Swift, co-founder of the Decentrader trading suite and inventor of the Golden Ratio multiplier method, also pointed out the SOPR crash.
He believes this is a potentially bullish turnaround for BTC price combined with the reset in derivative funding rates over the past week, as such events previously coincided with the start of new uptrends.
“The SOPR has now reset (green on the chart) which means wallet sales are now being sold at a loss,” he explained, adding:
“This is a strong buy the dip signal in a bull market. This is bullish along with resetting derivative funds.”BTC price vs. SOPR. Source: DecenTrader / Twitter @PositiveCrypto
The last time the SOPR went green was five months ago when Bitcoin was trading around $ 10,000. At the time, this was a major hurdle for BTC to trigger a new bull market. Since then, the price has soared more than five-fold to new all-time highs of around $ 58,000.
Still, many traders remain cautious as the market enters the month of March, which has historically been bearish for cryptocurrencies and all markets in general.
“I think March may be slow as I have no faith in traditional markets, but overall I am optimistic about Bitcoin and expect a significantly higher value over the next three months,” Swift said in private comments.
$ 44K- $ 45K remains the key level to watch
Meanwhile, Bitcoin traders are closely monitoring the $ 44,000 to $ 45,000 level. For example, trader Willy Woo says the $ 45,000 level is very strong support and expects drops below that level to be aggressively bought up if they occur.
UTXO Realized price distribution. This is the more precise version of the volume profile in the chain. The peak values indicate the price at which most coins have changed hands.
$ 45,000 on the upside is a very strong support.
Every jump (if you’re lucky) in $ 39k is a breeze at BTFD.
Data: @glassnode pic.twitter.com/Z4xbEr0jTv
– Willy Woo (@woonomic) February 27, 2021
Additionally, researchers at on-chain analytics firm Santiment believe the entire cryptocurrency market now depends on Bitcoin to be above this key level.
“It has been a red weekend so far, with most eyes on Bitcoin as it has bounced back compared to the Steig altcoins,” they said, adding:
Keep an eye on the $ 44,000 support level for BTC to monitor all of the crypto. As well as BTC’s on-chain activity.