Bitcoin Is Trading At A Loss & Ethereum Is Oversold, According To Kraken

Kraken says that Bitcoin and Ethereum are trading below their fair value. There is some green on the charts as Bitcoin moves back over $37,000.

Bitcoin Is Trading at a Loss and Ethereum Is Oversold, According to Kraken – Here’s What Could Happen Next

In its January 2022 crypto on-chain digest, Kraken says that Bitcoin’s spent output profit ratio (SOPR) and Ethereum’s market value to realized value (MVRV) Z-score indicate that ETH and BTC are trading below their fair value, but the exchange says that a rebound is possible.

“Though BTC’s SOPR shows that market participants are mainly trading BTC at a loss, the situation was much worse during Bitcoin’s latest bull run retracement from $65,000 to $30,000 from May 2021 to July 2021 before its rebound to new all-time highs.

Moreover, ETH’s MVRV Z-score shows that the crypto asset is now in ‘oversold’ territory, where it historically has struggled to remain for long periods before a bounce in prices.”

The SOPR on-chain metric determines if Bitcoin owners are selling at a profit or loss. If the SOPR is greater than 1, holders of the asset are selling at profit. Otherwise, they are selling at a loss.

BTC’s SOPR shows a bearish sentiment with a reading below 1, but Kraken says that the metric was worse last year when Bitcoin dropped from $65,000 in May to $30,000 in July.

“Should the metric break through a reading of 1 and hold above that level, it could signal the end of the recent bull market correction. However, if Bitcoin remains below a reading of 1 while [the] price continues dropping, it might otherwise confirm BTC has entered into a bear cycle…

While the SOPR is currently signaling bearish, on-chain data painted a much worse picture during the last similar market correction, after which BTC managed to make a strong comeback. In other words, don’t count BTC out just yet.”

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Master Asked on January 28, 2022 in Cryptocurrency.
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