Chain Gang 6/19

Adam Gotelli
4 min readJun 19, 2021


This week’s price action for Bitcoin saw a test of last week’s resistance of 40k. In fact, Bitcoin even reached a recent high of well over 41k on Tuesday. The price returning to the 37k-38k range comes as a surprise when taking into consideration the price action above previous support. Generally speaking, Bitcoin’s price breaking through that resistance of 40k would typically lead to a new higher price range. Many suspected new support of 40k, with a new resistance around the 47k area. Nonetheless, we remain hesitantly bullish on the asset in the short term. Long-term sentiment has not changed whatsoever. Now let’s take a look at some of the on-chain metrics that may be indicators for price in the coming weeks.

We’ll begin by taking another look at the SOPR index. With the SOPR (Spent Output Profit Ratio) index, if the chart is over 1, coins are trading at a profit, and under 1 means that coins are trading at a loss. This is in relation to when the coins were bought. If a trader sold at a profit, it appears above the 1 line. If they sold at a loss, it appears below the 1 line. This information is a recap for those who read last week’s article. Last week we zoomed out and took a look at SOPR action from a monthly view. This week, I took an even further step back and assessed the chart going back as far as 2013, and only observed the long-term holders (155 days or more). If previous levels are any indicator of the future, this chart conveys that SOPR has no more room to move sideways. This means that either a sharp move up (green arrows) or a sharp move down (red arrows) is coming in the near future.

Last week we also took a look at the illiquid supply change. An illiquid wallet is characterized by a long-term holder who does not have a tendency to sell their Bitcoin. We had mentioned how the bearish sentiment over the past month had finally started to appear as if it would be turning positive. When looking at this week’s chart, we see a confirmation of that assumption, as increasing liquid supply has returned to above zero. Returns to previous illiquid levels would be clear bullish sentiment.

One metric that provides glaring bullish sentiment from this past week is the Long-Term Holder Net Position Change. This simply takes a look at how much Bitcoin long-term holders have accumulated as a group in comparison to short-term holders. Basically a long-term versus short-term wallet comparison. We took a similar look at the Miner Net Position Change last week. Long-term holders added 127,760 BTC over the past week, while short-term holders liquidated 122,423 BTC. This adds to the steady increase of separation between the two groups in the chart.

We’ll once again end with my personal favorite chart, the S2F Model (Stock to Flow). Last week, we were on the brink of the model being completely invalidated with any further price action. This would have been bearishly alarming considering the model has been fairly consistent with Bitcoin’s price action since the asset’s inception. Thankfully, the chart has seen an end to downward price action and has begun to trend sideways. Pairing this news with the slightly bullish trends seen from on-chain metrics gives the chart hopes of remaining valid.

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