According to Philip Swift, a Bitcoin analyst and the creator of, sufficient technical and fundamental evidence hint Bitcoin is at an early stage of a bull market.

Swift cited the Spent Output Profit Ratio (SOPR) indicator of Glassnode to suggest a bullish trend might soon materialize. 

The Bitcoin Spent Output Profit Ratio (SOPR) chart. Source: Glassnode, Philip Swift

The optimistic technical indicators coincide with strengthening fundamentals. As the BTC Times reported, Bitcoin's hash rate and mining difficulty of the Bitcoin recently hit a new all-time high, indicating an overall positive market sentiment.

SOPR Indicator Shows Investors Are Selling at a Loss: Why Is This Optimistic?

Using on-chain data, the SOPR indicator evaluates the market sentiment by analyzing addresses on the Bitcoin network. If the SOPR value rises above 1, it means Bitcoin investors are sitting on profits. But if the SOPR value falls below 1, it shows that people are underwater with their holdings.

When investors sell Bitcoin at a loss, especially after a strong extended rally, it could indicate that weak hands are being shaken off. It might also show that investors are reluctant to sell BTC at a loss during a bull trend because they expect prices to increase.

From March 13th to August 17th, the price of Bitcoin rose from $3,596 to $12,500 on BitMEX. Following the 250% rally within merely six months, Bitcoin pulled back from $12,500 to $10,300.

The minor correction of around 17.6% could have caused weak hands and led some retail investors to sell, resulting in the SOPR to drop.

But analysts often argue that investors selling at a loss could mark the start of an accumulation phase as it means some investors are capitulating. Swift explained:

Spent output profit ratio (SOPR) is dipping below one right now. In bull markets this is a buy the dip opportunity. I believe there is sufficient technical and fundamental evidence to suggest we are in the early stages of a bull market right now.

The researchers at Glassnode also explain that SOPR could drop below 1 regularly during bull markets. 

“During bull runs, the market quickly corrects prices which drive the SOPR value below 1 (i.e. prices which mean people are selling at a loss). This is likely due to increased confidence that prices will continue to rise during a bull market, so it would be irrational to sell at a loss when gains are imminent,” the researchers noted.

Overall Market Sentiment Likely to Remain Positive

Unless the price of Bitcoin sees a major correction in the tune of 30% to 40%, the sentiment around Bitcoin will likely remain positive.

Another Glassnode indicator called “realized cap” evaluates all addresses on the Bitcoin blockchain network, which allows researchers to find the average entry price of Bitcoin investors. 

Bitcoin's realized cap. Source: Glassnode

The realized cap achieved an all-time high on September 24th to $115 billion. It shows that the average entry is at around $6,000, and as such, as long as Bitcoin does not fall to the $6,000 to $7,000 range, the sentiment is likely to stay neutral or positive.

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