Holder Conviction Confirms Selling Pressure Is Exhausted ∞ Insights

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Briefing

A rare bullish divergence has flashed in the Spent Output Profit Ratio (SOPR) metric, indicating that investor conviction is strengthening despite recent price weakness. This signals that the final phase of selling pressure is exhausted because holders are refusing to exit their positions at cheaper prices. The pattern historically marks a significant market bottom, suggesting the correction is over. This thesis is proven by the SOPR rising from 0.98 to 0.99 while the asset price made a lower low.

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Context

Following a sharp market drawdown, the core question for investors is whether the correction is complete or if a deeper capitulation is still necessary. The market is uncertain if veteran investors are dumping their supply or if they are holding firm, which would confirm a structural price floor.

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Analysis

The SOPR metric measures the average profit or loss of all coins spent on the network. A value below 1 means the average seller is taking a loss. When SOPR drops below 1, but then begins to rise while the asset price is still falling, it creates a powerful bullish divergence. This pattern means the coins being sold are, on average, being spent at a smaller and smaller loss.

This proves that the remaining sellers have strong conviction and are not panic-selling into the decline. The market is de-risked because the weakest hands have been flushed out, setting the stage for a potential reversal.

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Parameters

Key Metric ∞ Spent Output Profit Ratio (SOPR) ∞ Measures the realized profit or loss of all transacted coins.
Divergence Pattern ∞ SOPR rose from 0.98 to 0.99 ∞ The average loss taken by sellers decreased.
Price Action ∞ Price made a lower low ∞ The market price continued to fall during the SOPR rise.
Historical Precedent ∞ Similar pattern in March ∞ April led to a 46% rally ∞ The signal has high historical accuracy for marking a bottom.

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Outlook

This strong on-chain conviction suggests the market is structurally de-risked and a near-term bottom is likely established. The current price action is an accumulation phase, not a capitulation. A confirming signal to watch for next is a decisive break and hold above the $95,700 price resistance level, which would validate the bullish divergence and signal the start of a new upward trend.

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Verdict

Investor conviction is stopping the market decline, confirming a structural price bottom is now forming.

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