Blockchain data shows that short-term Bitcoin (BTC) holders are profiting from the sale of their coins, and the cryptocurrency’s near-term prognosis appears promising. Glassnode, a blockchain analytics company, reported that the spent output profit ratio (SOPR) of short-term holding has recently crossed 1. This is seen as a positive indicator for near-term price action.
“After a brief stint of coins moving at a loss, STH-SOPR is now back above 1, this is bullish for near-term price action as it shows capitulation from short-term holders.”
Blochware Solutions analysts highlighted the importance of the STH-SOPR crossing over 1. They believe it signifies short-term holders’ capitulation and supports a bullish outlook. When the short-term holder’s SOPR value exceeds 1, it indicates that they tend to make profits when selling their coins. When the reading is 1, it indicates that short-term holders are breaking even. A value less than 1 suggests a sign of capitulation.
The SOPR Metric for Short-Term Outlook
The SOPR is a metric that measures the amount of realized profit for all coins moved on-chain by dividing the realized dollar value of a spent output (UTXO) by its value upon output generation. The wallets with holding periods of under 155 days are to focus on the short-term holder SOPR.
In the past, the STH SOPR has consistently maintained a level of over 1 during bull markets. The pattern emerges as short-term holders, including new entrants, active traders, or weak hands, sell their assets for a profit higher than the purchase price. Additionally, during bull markets, the level near 1 frequently serves as a support level, luring investors to regard it as a beneficial purchasing opportunity in expectation of ongoing price increases. In contrast, level 1 acts as resistance when there are negative movements.
The STH SOPR tested the support level twice after crossing above 1 in January, which denoted a bullish trend reversal. Bitcoin has had a spectacular rise of over 68% this year. The cryptocurrency had a high of $28,441 during overnight trade and was now trading around $27,900.
Short-term holders’ profitability returning is a positive signal for Bitcoin’s near-term price movement. The STH SOPR rising over 1 boosts confidence among investors and market players.