Bitcoin (BTC) Price May Still Need to Reach the Top of the Current Bull Cycle, Here\'s Why

According to the trend in an on-chain indicator, an analyst has explained how Bitcoin may still need to reach the top of the current bull cycle.

An on-chain analyst has shared his observations on how Bitcoin may still have further to go in its price rally this year, based on an important indicator.

Bitcoin aSOPR Yet To Reach Levels Of Past Cycle Tops

As an analyst highlighted in a CryptoQuant Quicktake post, the Bitcoin Adjusted Spent Output Profit Ratio (aSOPR) has not reached the highs seen during the tops of previous cycles.

The “SOPR” refers to a popular on-chain indicator that essentially tells us whether crypto investors are selling their tokens at a profit or loss at the moment.

This metric does this by going through the blockchain history of each coin sold to see at what price it was transacted at before. If this previous price for any coin is lower than the price it’s being sold now, then its sale is leading to profit realization.

Coins of the opposite type would, in turn, imply loss-taking. The SOPR then calculates the ratio between such profits and losses being realized across the network to provide a net situation.

When the indicator’s value is above 1, it means that the investors are selling their coins at a net profit. On the other hand, values below this mark indicate the dominance of loss realization in the market.

In the context of the current discussion, the SOPR itself isn’t relevant here, but rather a modified form of it called the “aSOPR.” This indicator adjusts the SOPR data to exclude transactions of coins that were made within an hour of their previous transfers (hence the “adjusted” in the front of the name).

Now, here’s a chart that shows the trend in the 90-day exponential moving average (EMA) of the Bitcoin aSOPR over the past few years:

Bitcoin 90-day EMA aSOPR over the past few years. Source: CryptoQuant

As the above graph shows, the 90-day EMA Bitcoin aSOPR observed an increase alongside the rally earlier this year, which implies that investors ramped up their profit-taking as the coin’s price surged to a new all-time high (ATH).

However, with the bearish momentum that BTC has seen since then, the indicator has also seen a cool-down. At the peak of the profit realization spree, the indicator crossed the 1.05 value, but it has now dropped to just 1.01.

As the quant has highlighted in the chart, the bull run tops in 2017 and 2021 occurred as the indicator approached a value of 1.1. The recent high in the indicator has been at a level notably lower than this.

The peak level seen in the recent rally was instead more similar to the one observed during the peak of the April 2019 rally. This recovery surge from the previous cycle turned out to be a precursor to the main bull run that would come later on, and BTC may be observing something similar this time around as well.

BTC Price

Bitcoin has seen a rally of about 5% in the past 24 hours, with its price once again crossing above the $63,000 level.

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