Today Bitcoin Magazine will take a look at Bitcoin’s on-chain metrics, more specifically the Spent Output Profit Ratio (SOPR), the RHODL ratio and the Stock-to-Flow (STF) model.
SOPR is an indicator used to measure whether the market is in a profit or loss position. Its value is determined by dividing the sales and purchase prices by each unspent transaction service (UTXO). If it shows a value greater than 1, it means that the market is profitable and vice versa.
The SOPR fell below 1 throughout the May-July period, however, the sustained surge in BTC has brought the indicator back into profitability.
More importantly, SOPR recovered from Level 1 (blue circle) in September and has since moved up.
In the past, such bounces (black circles) have catalyzed significant upward movements.
This happens due to fake sell-offs where weak hands sell all of their coins before the uptrend resumes.
Bitcoin SOPR Chart | The source: Glass knot
The RHODL ratio is the ratio between the 1 week and 1-2 year HODL wavebands. A high ratio indicates that short-term owners are holding a large percentage of the current supply. It used to be a sign that the market was making all-time highs.
High rates are identified between 50,000 – 200,000 (marked in red). Both the 2013 and 2017 BTC peaks were generated in this zone. Meanwhile, the peak value in 2021 has a value of 17,700, which is well below the lower limit of the high value range of 50,000.
Hence, BTC still has a lot of room for growth before it hits the top.
Price list RHODL | The source: Glass knot
The STF deviation is the difference between the BTC price and the STF pattern.
A value higher than one (red line) indicates that BTC is overvalued relative to the pattern. Conversely, a value below one (green line) indicates that it is undervalued.
This indicator provides values as ratio values. So a value of 0.5 means that the BTC price is 0.5 times the price predicted by the model, while a value of 1.5 means that the price is 1.5 times the price suggested by the model amounts to.
In July (black circle) the indicator showed a value of 0.314, a 10-year low. This is a sign of the model’s undervaluation. Then the STF appeared on October 2nd (blue circle) and continues to rise.
The current value is 0.6, which suggests that BTC is still undervalued compared to the model.
Historically, values greater than 1 coincide with local peaks and period peaks.
Bitcoin Stock-to-Flow Diagram | The source: Glass knot
You can see the BTC price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
SN_Nour
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