Since the beginning of 2022, the price of bitcoin has been trading inside a range, forming two critical supply and demand levels. The following analysis aims to identify the supply and demand areas that form this range, and also to justify the behavior of the market 2021-2022 based on the profitability of long-time holders or the LTH-SOPR metric.
The daily chart
Technical analysis by: Shayan
Based on market behavior throughout this time frame, as shown below, massive liquidity (stop-loss orders) exists above the $45,000 resistance level, and also below the breakout zone. bracket of $34,000. The market usually soaks up liquidity before starting any healthy push.
Due to tomorrow’s FOMC meeting, which will bring critical decisions regarding interest rates and US money supply growth/printing, the market faces uncertainty.
The meeting can put an end to this confusion on both sides; however, if the direction is bullish, the first major resistance is the marked descending trend line visible on the RSI indicator (the lower portion of the following chart).
The 4 hour chart
On the other hand, in the short-term 4-hour timeframe, the $37,000 support zone proved to be a strong support level, preventing BTC from dropping to lower levels.
In the event of a bearish outcome, $37,000 is the level to watch. Also, it is worth mentioning that the descending trendline is the main resistance for the price on the lower frames.
On-chain analysis: Bitcoin SOPR Ratio (LTH-SOPR / STH-SOPR)
Analysis of the behavior of short-term and long-term holders generally provides useful information. the RPSO The ratio is an on-chain measure used to determine whether long-term or short-term holders are the current dominant sellers in a given market.
An increase in this metric indicates that long-term holders are earning profits at a higher rate than short-term holders. This cohort tends to sell off in force, making gains in the bull markets, and then begins to accumulate during the downtrend, as short-term holders start selling in a panic.
As the chart shows, long-term holders distributed during the bull market until the all-time high of $64,000 was reached. After the May 2021 crash, they began a long period of accumulation that continues to this day.
However, there was a short period in September and November 2021 where the metric rose again as long-term holders started taking profits as the market recovered towards the all-time high of $69,000.
The SOPR ratio is currently consolidating after a slight rise, so it should be watched to determine if this spike is the start of an uptrend, indicating that long-term holders are capitulating.
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