Key Points
- Bitcoin’s Long-Term Holder (LTH) Spent Output Profit Ratio (SOPR) displays low values, indicating less profit realization from sales by these holders.
- This trend could potentially lead to further downward pressure on Bitcoin’s price, but also presents an accumulation opportunity for other investors.
Bitcoin’s long-term holders, or those who have held the digital currency for an extended period, are currently in a challenging position with their holdings. The LTH Spent Output Profit Ratio (SOPR) has shown relatively low values, suggesting these holders are not realizing substantial profits from their sales.
Instead, it appears they might be liquidating their positions due to concerns about future price declines or in response to market uncertainty. If this trend continues and more long-term holders decide to sell, it could contribute to further downward pressure on Bitcoin’s price.
Understanding SOPR
The SOPR is a key metric for understanding the profitability of Bitcoin sales. When the SOPR value is above one, it indicates that long-term holders are selling at a profit. Conversely, a value below one suggests they are selling at a loss.
The low SOPR value for long-term holders highlights that these participants are not capitalizing on significant gains and may be selling due to concerns about the market’s near-term prospects. This could be a bearish signal, suggesting that these holders are now uncertain about its immediate price direction.
Implications for Bitcoin
The low LTH SOPR indicates that long-term Bitcoin holders are not realizing significant profits and may be reducing their positions. If this trend persists, the LTH SOPR hovering around or below one could lead to continued downward pressure on Bitcoin’s price. This could signal a period of further declines as the market processes these sales.
However, such a scenario also presents a potential accumulation opportunity for those looking to enter the market at lower prices. Historically, periods where the SOPR remains low have sometimes been followed by market recoveries. Investors take advantage of the reduced prices to accumulate more Bitcoin.
A recent example of this type of accumulation is observed in the actions of a whale address. Data shows that this whale purchased 1,000 BTC, worth approximately $57 million when Bitcoin’s price hit bottom.
Also, the same whale reportedly deposited 7,790 BTC, valued at $467 million, when the price dropped by approximately 14% some months back.
The price of Bitcoin has experienced a nearly 3% decline in the last trading session. The price dropped from a high of around $59,000 during the session to approximately $57,299. As of this writing, Bitcoin was trading at around $57,500, reflecting a modest increase of less than 1%.
The chart analysis, particularly the position of the moving averages, confirmed that Bitcoin was in a bearish trend.
