the market has not yet reached capitulation levels

BTC and SOPR

The spent yield profitability ratio (SOPR) is an on-chain indicator that estimates the profit or loss for each transaction made. Accordingly, it demonstrates whether the market as a whole is in profit or loss. It is calculated based on unspent transaction balance (UTXO) data as a result of dividing the selling price by the purchase price of the coin.

The value of SOPR >1 (black line) suggests that market participants receive a cumulative profit from the sale of BTC. Accordingly, the coefficient <1 indicates that they incur losses, and the value of 1 indicates a neutral state of the market.

If this on-chain metric bounces off the 1 mark and does not fall below it, this is one of the signs of a bullish trend.

This was clearly demonstrated during the bull market of 2016-2018, when the indicator made four rebounds from level 1 (black circles), after which it launched active growth.

Subsequently, the SOPR value fluctuated freely on both sides of mark 1 (black rectangle) for almost a year. This is a sign of market indecision and inability to determine the direction of the trend. However, when this happens after such a steady bullish rally, it usually means the end of the bullish trend.

This period in the market ended in December 2018 with a capitulation, during which SOPR sank to 0.86. After that, the BTC rate launched a new bullish trend.

Source: Glassnode

The current bull run was much shorter, according to SOPR, as the indicator only bounced twice from level 1 (black circles).

Since May 2021, this on-chain metric has fluctuated on both sides of mark 1, as in 2018. However, we have not yet seen a capitulation similar to the one that took place in December 2018. Thus, it is possible that in the end it will still happen, after which the market will form the bottom.

Source: Glassnode

RHODL coefficient

The RHODL ratio is an on-chain indicator that evaluates the ratio between HODL waves representing different age groups of unspent balances on UTXO transactions (1 week and 1-2 years), weighted by the realized value of coins in each group.

This value is considered high if it reaches the area of 50,000 – 200,000 (red color on the chart). Meanwhile, the coefficient in the region of 80 – 300 (green color) is considered low.

The high ratio indicates that the holders of a significant percentage of the current supply of BTC are short-term coin owners. Historically, this coincides with the formation of the market top, as it was already in 2013 and 2017.

Currently, such a situation is not observed, since long-term HODL waves are now close to a historical maximum.

The value of the RHODL coefficient is now 617, which is higher than the oversold area (300). Previously, this on-chain metric formed bases (black circles) when it reached this value.

As with the SOPR graph, this suggests that before forming a bottom, the market will still go through a phase of capitulation.

However, this is not a foregone conclusion. So, the base in March 2020 was achieved at a value of RHODL 1 100 (red circle).

Source: Glassnode

Read lastproximate analysisalongbitcoinCanIn here.