Bitcoin (BTC) has been trading within a narrow range of $29,000 to $31,000 since the end of June 2023. Despite some short-term fluctuations, the cryptocurrency has not experienced a significant breakout or breakdown in its price. However, a recent on-chain analysis of the Spent Output Profit Ratio (SOPR) indicator suggests that bullish signals are emerging, indicating a potential upward movement for BTC. If this bullish scenario unfolds, Bitcoin could surge by as much as 35% in the coming weeks, setting its sights on a target price of $38,600.
The SOPR indicator calculates the realized value of Bitcoin (in USD) divided by the value at the time of its creation (also in USD). Essentially, it represents the selling price versus the buying price of Bitcoin. The adjusted SOPR, on the other hand, disregards outputs with a lifespan of less than 1 hour.
Looking at the short-term adjusted SOPR chart from the first half of 2023, a recurring pattern becomes evident. The indicator has already signaled upward movements on three occasions in February, March, and June. The pattern typically begins with the adjusted SOPR reaching highs around 1.04-1.05. Subsequently, it starts to print lower highs and lower lows, coinciding with the consolidation of the BTC price. Eventually, the SOPR drops below 1 for a period. However, at some point, there is a noticeable exhaustion of the downward trend, and the first higher lows emerge. This reversal leads to an upward turn in the chart. The breakthrough of level 1 is key in this pattern, and sometimes it is followed by bullish validation.
To validate this pattern in the current market conditions, the aSOPR must confirm line 1 as a support level. If this were to occur, Bitcoin’s price could potentially surge once again. Based on the SOPR analysis, the targets for Bitcoin’s anticipated upward movement can be determined by comparing the indicator’s breakout periods with the BTC price chart.
Since the latter half of June, Bitcoin has been trading within a range of $29,000 to $31,000, with minimal deviations. This range was established subsequent to a significant upward move in mid-June, which generated profits of 29%. The previous two upward movements in 2023 occurred in mid-March and mid-February. The former represented Bitcoin’s most substantial price surge of the year, resulting in a 59% increase. The latter was comparatively weaker but still yielded an 18% gain. By calculating the arithmetic average of these three upward movements in conjunction with the SOPR indicator, a potential 35% surge in the Bitcoin price can be projected. This would bring the target price for BTC to $38,600. However, before reaching this milestone, Bitcoin must overcome a significant resistance level at $36,000, which corresponds to the 0.382 Fib retracement, measuring the long-term downward movement from the all-time high in November 2021. A successful break above this resistance would signal the end of Bitcoin’s price correction and potentially mark the beginning of a new bull market in the cryptocurrency industry.
It is worth noting that if Bitcoin were to close daily candles below the $28,300 level, the bullish scenario outlined above would be invalidated. In this case, a move towards the previous swing low in the $25,000 range would become highly probable.
In conclusion, Bitcoin is showing bullish signals through the on-chain SOPR indicator, indicating the potential for a substantial upward movement. Based on historical patterns and the SOPR analysis, a surge of up to 35% is conceivable, with Bitcoin’s price targeting $38,600. It is important, however, to monitor Bitcoin’s price movements closely, as the cryptocurrency market is known for its inherent volatility.
