On-chain data shows Bitcoin short-term holders are increasingly selling at a loss following the latest crash in the crypto’s price.
SoPR Drops Below 1 for Bitcoin Short-Term Holders
An analyst pointed out in CryptoQuant that STH SOPR had fallen to July levels. This suggests that short-term investors are becoming more aware of their losses.
The Spent Output Profit Ratio, or “SOPR” in short, is a Bitcoin indicator that tells us whether investors are selling at a loss or a profit during a given period.
The metric’s value is calculated by taking the ratio between the value of coins at spent time, and that at the time of creation.
The SOPR below 1 means that investors sell at a loss on average. If it is above this threshold, the market makes a profit. Holders are making a loss if it is exactly one.
The STH SOPR is a slight variation to this indicator. It measures profit ratios for coins held less than 155 calendar days prior to being sold.
These coins are often assumed to be short-term holder supply (STH). The STH SOPR shows whether or not these holders made a profit at any given time.
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Here’s a chart showing the trends in the Bitcoin indicator for the last year.
It appears that the value of this indicator has dropped sharply in recent months. Source: CryptoQuant| Source: CryptoQuant
The above graph shows that the Bitcoin SOPR fell to 0.95 yesterday. In July, similar lows were last seen.
The current low prices suggest that some short-term owners are increasingly selling their coins to make ends meet. The May BTC crash triggered a similar trend.
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An analyst posted in this post believes that the coin could follow the same sideways movements as in July, or set up an additional leg up for Bitcoin.
At the time of writing, Bitcoin’s price floats around $48.4k, down 15% in the last seven days. In the past month, crypto lost 20%.
Below chart displays the five-day trend of Bitcoin’s prices.
BTC's value has largely moved in the opposite direction since the crash. Source: BTCUSD at TradingView| Source: BTCUSD on TradingView
A few days back, Bitcoin’s price crashed down to as low as $42k before jumping back up to current levels. The crypto market has largely remained stable since then.
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts