Crypto analysis firm Alphractal has issued a cautionary report suggesting that Bitcoin could be entering a bear market phase. The firm has highlighted the significance of the Spent Output Profit Ratio (SOPR) Trend Signal in assessing Bitcoin’s market trends.
SOPR Trend Signal: A Key Indicator
According to Alphractal, the SOPR Trend Signal, combined with exponential and simple moving averages (EMA and MA), has been instrumental in identifying market cycles since 2015. This combination helps to filter noise and provide clear buy and sell signals. The firm notes that over time, bull markets have become shorter, while bear markets have been prolonged.
2024 Data Shows an Unusual Pattern
Alphractal’s analysis indicates that the data for 2024 presents an unusual model. The firm points out that only one SOPR signal has exceeded the critical 1.015 level, typically a sign of an extended bear market. This contrasts with previous cycles, where two signals supported a downward trend. Based on the current pullback of SOPR, the report outlines three potential scenarios:
- All-Time High: Bitcoin could potentially reach a new record price, similar to its November 2021 peak. However, recent data suggests the trend may be reversing into a bear market.
- Bear Market Already in Play: A second SOPR signal may not appear, indicating that the bear market could have started as early as March 2024.
- Optimistic Reaccumulation: The metric could rise again, leading to a reaccumulation phase reminiscent of 2019-2020. In this case, Bitcoin may eventually reach new all-time highs, though this process could take months to unfold.
With three potential scenarios at play, investors should closely monitor Bitcoin’s movements. Whether the market is entering a bear phase, or gearing up for a reaccumulation period, only time will reveal the next chapter for Bitcoin.
