The BTC/USD pair briefly dipped below $44,000 on Bitstamp before paring some of the losses, bouncing back above $45,000 at the time of writing.
As reported by Cointelegraph, some analysts have noted an uptick in miners’ selling as the reason behind the latest drop in price.
Luckily, the third retest of this key support level may have a silver lining for the bulls. Data analytics resource Glassnode indicated that the daily Bitcoin Spent Output Profit Ratio (SOPR) has seen a “full reset.”
The SOPR shows whether spent outputs are in profit or loss at the time of transaction. This key metric turned negative for the first time since September 2020. In other terms, investors are now moving BTC at a slight loss on average, suggesting that profit-taking has abated, according to Glassnode.
The analysts also added that “In total, we saw an on-chain net realized loss of $243 million yesterday.”
At the same time, popular trader Philip Swift, the co-founder of trading suite Decentrader and creator of the Golden Ratio multiplier method, also pointed out the SOPR crash.
He considers this a potentially bullish turnaround for BTC price in combination with last week’s reset of derivatives funding rates because such events have previously coincided with the start of new uptrends.
“The SOPR has now reset (green on the chart) meaning that wallets selling are now selling at a loss,” he stated, adding:
“This is a strong ‘buy the dip’ signal in a bull market. This alongside derivative fundings having reset is bullish.”
The last time the SOPR flipped green was five months ago when Bitcoin was trading about $10,000. At that time, this was a key hurdle for BTC to trigger a new bull market. Since then, the price has surged more than five folds to new all-time highs of around $58,000.
Nonetheless, many traders remain cautious as the market enters the month of March, which has historically been bearish for cryptocurrencies, and all markets in general.
Meanwhile, Bitcoin traders are keeping a close eye on the $44,000-$45,000 level. Trader Willy Woo, for example, says the $45K level is very strong support and expects any dips below this level to be bought up aggressively should they occur.
In addition, researchers at on-chain analytics firm Santiment think that the entire cryptocurrency market now depends on Bitcoin holding above this key level.
“It’s been a red weekend thus far, with most eyes on Bitcoin as it has rallied back vs. the climb altcoins were making,” they stated, adding:
Keep an eye on the $44k support level for BTC as an indication to monitor for all of crypto. As well as BTC’s on-chain activity.