Bitcoin’s May Sell-Off: Shocking But Profitable!

Interestingly, the spent output profit ratio (SOPR) for BTC, which indicates the degree of realized profit, witnessed a number of spikes during the month. As per the report, these levels have not been seen since December 2020, “suggesting that considerable profit taking has taken place in the spot markets”. This could be indicative of a shift in the broader market sentiment towards bitcoin.

In addition, the amount of BTC held on exchanges saw a sharp decline of 12%, while ether supply saw a slight gain. Wall Street giant, Goldman Sachs, noted that this could potentially be an indication of the ongoing market volatility.

The bank also highlighted network congestion on both the BTC and Ethereum blockchains as a key issue in May. This caused monthly address activity for bitcoin and ether to fall by 13.8% and 16.7% respectively, as user activity was deterred by higher transaction fees. However, as the network congestion resolves, it is likely that the activity levels will pick up again.

Furthermore, the bitcoin average mean hash rate continued to push past its all-time high in May, gaining 5.4% during the month, with miner revenues increasing by 16.4%, as per the report. Hashrate refers to the total combined computational power being used to mine and process transactions on a proof-of-work blockchain, such as Bitcoin. This could be indicative of the growing interest in bitcoin mining and the increasing profitability of mining operations.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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