Cryptocurrency analytics firm Alphractal has issued a cautionary assessment of Bitcoin’s status, suggesting that the world’s largest cryptocurrency may be entering a bear market phase.
In a recent statement, Alphractal noted that Bitcoin’s proprietary metric, the Spent Output Profit Ratio (SOPR) Trend Signal, has been important in determining market trends throughout its history.
Alphractal’s analysis combines SOPR with exponential and simple moving averages (EMA and MA) to filter out noise and provide clear entry and exit signals. This combination has been crucial in determining market cycles since 2015, according to the analytics firm. Specifically, bull markets have been observed to be shorter in duration, while bear markets have been longer in duration.
According to the analytics company, data in 2024 reveals an unusual pattern. According to Alphractal, only one SOPR signal has broken the critical 1,015 level, which is typically enough to signal a prolonged bear market. This contrasts with previous cycles where two such signals continued the bearish phase. According to the report, the current SOPR pullback has led to three possible scenarios:
- All-Time High: Analysts say Bitcoin could reach a new record price, similar to its November 2021 peak. However, recent data suggests the trend is reversing into a bear market.
- Bear Market Already in Play: A second SOPR signal may not occur, meaning the bear market could begin as early as March 2024.
- Optimistic Reaccumulation: The metric could rise again, signaling a reaccumulation phase reminiscent of 2019-2020. This could potentially send Bitcoin to new all-time highs, but that scenario could take months to play out.
*This is not investment advice.