flow out of U.S. spot Bitcoin ETFs. This saw a 22% drop in assets under management of Bitcoin-linked funds.The bands are a mean reversion indicator. When the band’s extremes are breached, usually there is a movement toward the mean.The analyst pointed out on the chart that the upper band was breached recently, but that the MVRV ratio was back with the bands. This suggested that it would move lower to the 365-period moving average.
Such a reversion would mean a 20% drop in prices for Bitcoin. The MVRV ratio, which is at 2.23, would be closer to 1.7 and such a retracement would be completely normal.The spent output profit ratio indicates how profitable the market participants are. The 7-day EMA peaked at 3.7 on the 23rd of March and has dipped sharply since then.In terms of value, the current situation was similar to the SOPR peak back in 2019 July, when the market rejected from a reading of 4.2.
Alternatively, the SOPR drop could also suggest a temporary top for Bitcoin. The market would need time to consolidate and absorb the selling pressure from fearful participants and profit-takers.Akashnath Sumukar works as a Senior Journalist at AMBCrypto. Based in Chennai, India, he has been an avid follower of the cryptocurrency market since Bitcoin’s boom and bust cycle of 2017. A graduate in Chemical Engineering, he is an expert in technical analysis.
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