On-chain Bitcoin data indicates that the current trend in SOPR with short-term holders is very similar to what it was back in June. It could be that the bear market has begun in a similar fashion to June.
Bitcoin Short-Term Holders Continue To Realize Losses
An analyst pointed out that Bitcoin short-term investors have been continuing to make profits, according to CryptoQuant. This may mirror the trend seen in June.
The “Spent Output Profit Ratio,” or SOPR in short, is an indicator that measures the profit ratio of the overall market by looking at the price each coin was sold at and comparing it with the price it was bought at.
If this value is greater than one, holders on average are selling their Bitcoin at a profit. Investors who have SOPR less than 1 would be dumping Bitcoin for a loss.
If the value of the metric is exactly one, it would indicate that the market for Bitcoins in general is at break-even.
This indicator can be modified by the SOPR (short-term holder) This measure accounts only for coins which were not sold within 155 days.
Below is a chart that illustrates the Bitcoin STH SOPR’s trend for the past one year.
The current indicator seems to be lower than one. Source: CryptoQuant| Source: CryptoQuant
You can see that Bitcoin STH SOPR is below 1 for quite some time, which indicates that holders are selling at a loss.
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The indicator tested the SOPR equal or one trendline less than two weeks ago. It was returned downwards, however.
The reason for the rejection is possibly that since the SOPR = 1 line represents the “break-even” point, holders would be keen to sell as soon as the price reaches that point as they would feel they got their money “back.”
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The metric also saw a similar retest in June during a mini-bear period for Bitcoin.
As the indicator was also rejected downwards then just like now, it’s possible the market may observe a similar bear market situation.
At the time of writing, Bitcoin’s price floats around $42.7k down 10% in the last seven days. In the past month, crypto lost 12%.
Below is a chart showing the trends in crypto’s price over the past five days.
BTC has seen a sharp drop in price over the last day. Source: TradingView.| Source: BTCUSD on TradingView
Unsplash.com's featured image. Charts by TradingView.com. CryptoQuant.com chart.