Since early 2022, the bitcoin price has been trading inside a range, forming two critical supply and demand levels. The following analysis aims to identify those supply and demand zones that form this range, and also justify the 2021-2022 market behavior based on the Long-Time Holders’ profitability or LTH-SOPR metric.
Techncial Analysis By: Shayan
Based on the market behaviour throughout this period, as shown below, massive liquidity (stop-loss orders) exists above the $45K resistance level, and also below the $34K support zone. The market usually absorbs the liquidity before beginning a possible healthy surge.
Due to the FOMC meeting tomorrow, which will carry some critical decisions regarding interest rates and the growth/printing of the United States money supply, the market faces uncertainty.
The meeting may end this confusion to either side; however, if the direction is upward, the first major resistance is the marked descending trendline seen on the RSI indicator (the lower section of the following chart).
On the other hand, in the 4-hour’s short-term timeframe, the $37K support area has been proving itself as a solid support level, preventing BTC from dropping to lower levels.
In case of a bearish outcome, the $37K is the level to look at. Besides, it is worth mentioning that the descending trendline is the primary resistance for the price on the lower time frames.
Analyzing the behavior of the short-term and long-term holders usually provides helpful information. The SOPR Ratio is an on-chain metric used for determining if the long-term or the short-term holders are the current dominant sellers in a given market.
An increase in this metric indicates that the long-term holders realize profits at a higher rate than the short-term holders. This cohort tends to sell into strength, realizing gains in bull markets, and then, they begin accumulating during the downtrend, as the short-term holders start panic selling.
As the chart shows, the long-term holders have been distributing during the bull market until the $64K all-time high was nailed. After the May 2021 crash, they began a long period of accumulation which continues to this day.
However, there was a short period in September and November 2021 where the metric rose again as the long-term holders started realizing profits while the market was rallying towards the $69K all-time high.
The SOPR Ratio is currently consolidating after a minor rise, so it should be tracked in order to determine if this spike is the beginning of an uptrend, indicating that the long-term holders are capitulating.
