Since the end of June 2023, Bitcoin (BTC) has been in a narrow range between $29,000 – $31,000. Short-term deviations from this tight trading channel have not resulted in a breakout or breakdown in the price of the largest asset.
However, the latest on-chain analysis of the SOPR indicator shows bullish signals for potentially another upward move. If the bullish scenario plays out, BTC could rise as much as 35% in the next few weeks with a target of $38,600.
Short-Term SOPR Gives Bullish Signals
Spent Output Profit Ratio (SOPR) is an on-chain indicator that is calculated by dividing the realized value (in USD) by the value when creating the realized output (in USD). In other words, it is the selling price/buying price. Adjusted SOPR, on the other hand, is the same indicator, only ignoring all outputs with a lifespan of less than 1 hour.
We see a recurring pattern in the short-term aSOPR chart from the first half of 2023. It has already signaled upward movements three times, occurring in February, March, and June.
The pattern looks like this: first, the aSOPR reaches highs around 1.04-1.05. Then it starts to print lower highs and lower lows (red arrows), which come with consolidating the BTC price. Then the SOPR drops and moves below 1 for a while.
Then, at some point, there is a noticeable exhaustion of the downward trend of this on-chain indicator, and the first higher lows appear. The chart begins to turn back upward (blue arrows). The key here is the breakthrough of level 1, and sometimes its bullish validation (green circles).
If this pattern is also repeated under current market conditions, the price of BTC could surge again. For this to happen, it is necessary for aSOPR to approve line 1 as support.
BTC Price Prediction: Target at $38,600
Based on the SOPR analysis, one can now find targets for Bitcoin’s potential upward move. Juxtapose the indicator’s breakout periods (blue boxes) and returns on the BTC price chart.
Since the second half of June, the BTC price has been moving (with slight deviations) in a narrow range between $29,000 – $31,000. This range stabilized after a sizable upward move in mid-June, which generated 29% profits.
The previous two legs up in 2023 occurred in mid-March and mid-February. The former was Bitcoin’s strongest upward move of the year, leading to a 59% surge. In contrast, the latter was weaker but still generated an 18% gain.
Then one can draw the arithmetic average of all these 3 upward moves, which are in confluence with the SOPR indicator. Then we get a potential upward move of 35% of the Bitcoin price.
This would bring the BTC price to its target of $38,600. Before that, an important resistance to overcome would be the level of $36,000 at the 0.382 Fib retracement, measuring the long-term downward movement from the all-time high of November 2021. If this area could be broken, it would be another signal of the end of the Bitcoin price correction and the start of a new bull market in the cryptocurrency market.
However, the bullish scenario will be invalidated if Bitcoin begins to close daily candles below the $28,300 level. Then a move to the previous swing low in the $25,000 area will be probable.
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