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Analysts believe that the spent output profit ratio strongly suggests that investors should buy the decline in BTC.
Speculators in Bitcoin (BTC) have been selling at a loss, and this week promises a fantastic purchasing chance, according to analysts.
Data shows Bitcoin’s spent output profit ratio (SOPR) flipped negative for the first time in six weeks on Wednesday.
SOPR says “buy the dip”
Negative is a typical purchase indication. SOPR means that sellers have been dumping BTC at a loss, and as a result, the oversold market is ready for longer-term hodlers to benefit from inexpensive coins.
The last time SOPR was negative was on July 20, just before Bitcoin reclaimed $50,000.
“Spent Output Profit Ratio went negative (green) yesterday as on-chain speculators were selling at a loss,” Philip Swift, an analyst at trading platform Decentrader, summarized to Twitter followers Thursday.
“Paints a v.similar picture to funding rates in recent months in that a lot of forced selling took place over the summer making this more of a buy-the-dip opportunity now.”
“Good news” for Bitcoin bulls
According to research, Tuesday’s BTC price drop was caused by overleveraged traders who were unable to withstand selling pressure from young whales.
After the market flushed out those players, there is renewed hope for more sustainable price gains.
Meanwhile, SOPR data for on-chain monitoring resource Whalemap points to the prospect of higher levels returning.
“SOPR around 1 in an up-trending market is good news,” staff commented on the metric’s current readings.
In private comments to Cointelegraph, the Whalemap team added that “a little bit more sideways” should first characterize the market before upside ensues.