• Bitcoin fails to hold above the $27,500 level, suggesting that a drop to $23,000 is possible.
• Short-term holders of Bitcoin have been taking profits and moving back above 1 on the SOPR.
• A short-term holder SOPR of more than 1 signals capitulation from short-term holders.
Bitcoin Price Vulnerable to Drop Below $27,500
Bitcoin (BTC) price has failed to hold above the $27,500 level suggesting that the gates to a downside to $23,000 are still open. The Bitcoin short-term spent output profit ratio (SOPR) has once again moved back above 1, hinting that short-term holders are taking profits.
US Lawmakers Proposal Affects BTC Price
Earlier this week on Monday, May 29th, the Bitcoin (BTC) price made a quick surge to over $28,000 after news that US lawmakers will soon pass a proposal to raise the debt ceiling further. Along with Bitcoin, other cryptocurrencies in the market also gained traction but unfortunately this was only for a short time before BTC erased all its gains of 4%. As of press time it is trading 0.64% down at a price of $27754 and a market cap of $538 billion.
Short Term Holders Selling at Profit
Popular trader Crypto Tony said that if BTC closes below $27500 then he will look for opportunities to go short on it as there is potential for it dropping down further till 23k USD levels. Following yesterday’s bounce back in prices many short positions were opened up indicating profit taking by short term holders thus reducing chances of bull run continuation in near future. On chain resource Material Indicators noted that “the bounce came from key technical support at the 200-Week Moving Average” which could be an indicator of legitimate price action seen in last few days leading up till now.
SOPR Signals Capitulation from Short Term Holders
As per data gathered by blockchain analytics firm Glassnode it was observed that seven day moving average of STH SOPR remained above 1 showing capitulation from these investors as they sold their holdings at profits during recent bearish waves in market prices . Analysts at Blockware Solutions commented upon this saying “STH SOPR being back above 1 is bullish for near term price action as it indicates capitulation from these traders” A SOPR reading higher than 1 shows investor sentiment turning more bearish while readings lower than one suggest neutral sentiment among these investors with them not gaining or losing money through their trades currently .
To sum up , due to recent events like US lawmakers proposing debt ceiling increase and BTC bouncing off 200 week MA support , there has been some renewed interest among crypto traders who have taken advantage of this situation by taking profits through their investments . This situation however might lead towards bearish sentiments prevailing over near future unless signs of bullishness start appearing soon enough .