Publish date:
As this bitcoin price bull cycle carries on, everyone wants predictions of when the price may top out. We will add one framework to the mix.
Author:
As this bitcoin price bull cycle carries on, everyone wants predictions of when the price may top out. We will add one framework to the mix.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now[2].
As the bull cycle carries on, everyone wants price predictions and a better understanding of when the price may top out and reverse course. Although we expect bitcoin to reach a six-figure price this cycle, it’s difficult to estimate how far the cycle will extend beyond that. There’s a lot of different models, thoughts and projections on this already. We will add one framework to the mix using long-term holder cost basis and long-term holder historic spent output profit ratio (SOPR) trends. This shouldn’t be taken as a price prediction for the cycle but rather a logical thought exercise based on simple historical assumptions.
SOPR tells us price sold over price paid, indicating what profit levels long-term holders realized in the past. At the peak price over previous all-time highs in 2018 and 2021, long-term holder SOPR peaked at 20.74 and 9.04, respectively. Said otherwise, that’s 1,974% and 804% realized profit. A big market question is at what price level will a portion of long-term holders be incentivized to sell some of their bitcoin? That will likely mark the cycle top.
Using the long-term holder cost basis, an estimate for the
