Will The Bitcoin Short-Term Holder Breakeven Point Act As Resistance Again?

On-chain data shows the Bitcoin short-term holder SOPR is approaching the “breakeven” value, a point that has acted as resistance for the crypto’s price in the past.

Bitcoin Short-Term Holder SOPR Surges Up And Approaches A Value Of “1”

In a CryptoQuant article, an analyst pointed out that short-term holders might feel more selling pressure if the SOPR rises.

The “Spent Output Profit Ratio” (or SOPR in short) is an indicator that tells us whether the Bitcoin market as a whole is currently selling at a profit or at a loss.

This metric uses the online history of every coin sold to find out its prior price. If any previous price of a coin was lower than its current one, that means the coin is moving at profit.

The sale of the coin would be deemed to have occurred if the previous selling price was lower than the current one.

When the SOPR’s value is greater than one, it means the overall market is selling at a profit at the moment. However, values lower than the threshold mean that average investors are losing BTC.

Now, the “short-term holders” (STHs) include all Bitcoin investors who sell their coins after holding them for less than 155 days. Below is a chart that shows how the SOPR has changed for this particular cohort.

Bitcoin Short-Term Holder SOPR

 Source: CryptoQuant| Source: CryptoQuant

As you can see in the above graph, the Bitcoin STH SOPR sunk down below “1” a few months back, suggesting that these holders were selling at a loss.

In the past few months, this indicator tried twice to exit the zone, and both failed. The price, on the other hand, went down.

The reason behind this trend is that the “SOPR = 1” line represents the “breakeven” point for the market. As the metric hits this level, investors who had previously been at loss think they have now got their money “back” and thus sell their coins here.

The STHs will be selling Bitcoin at a greater than normal level, which is causing resistance to Bitcoin’s price.

Recent surge in the SOPR value for this holder group is now nearing the threshold. BTC might see another downtrend once the price test is completed.

BTC price

At the time of writing, Bitcoin’s price floats around $23.7k, up 5% in the last seven days.

Bitcoin Price Chart

 Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Amjith S, Charts on TradingView.com, CryptoQuant.com Featured Image

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