Key Points
- Bitcoin’s SOPR metric has peaked again, causing worry about market volatility.
- An increase in long-term holders cashing out could indicate a deeper Bitcoin correction.
Bitcoin’s SOPR Metric
The Spent Output Profit Ratio (SOPR) of Bitcoin has formed another peak, which could be a sign of impending market volatility. Over the past ten days, there has been an increase in selling pressure due to uncertainty leading up to the halving. Long-term holders have significantly contributed to this pressure.
The SOPR reflects the degree of realized profit and loss for all coins moved on-chain. It’s measured by the ratio of the USD value of Bitcoin’s spent outputs at the spent time, or realized value, to the spent outputs at the created value. This metric gives analysts a good idea of whether holders are at a profit.
Long-term Holders Cashing Out
According to CryptoQuant Insights, a specific variation of the SOPR ratio indicated that an increasing number of long-term holders were cashing out. The descending trendline from a decade ago suggested that a potential market top was near. The firm rejection from this trendline by the metric indicated the possibility of a deeper Bitcoin correction.
The short-term SOPR, which deals with Bitcoins alive for over one hour but less than 155 days, fell to 0.998 on the 22nd of April. This shows that short-term investors were selling at a minor loss. Comparing this with the 2020 bull run, the metric did not drop below zero after September. The halving for that cycle was in May, and a correction in August saw this ratio fall below 1. Bitcoin may be moving down a similar path during this cycle.
The daily chart showed that Bitcoin had been trading within a range since March. The higher timeframe trend and market structure were firmly bullish. However, the RSI meandered between 40 and 60 values in the past month, indicating a lack of strong momentum. The OBV was also unable to steer clear of the highs it made in mid-March. Encouragingly, it has crept higher in the past ten days to reflect increased buying pressure. Despite this, a price correction remained possible.
