Recent on-chain data reveals a troubling trend for Bitcoin short-term holders (STHs), as many have started selling their holdings at a loss. This development could have significant implications for the cryptocurrency’s price trajectory in the near future.
Bitcoin Short-Term Holder SOPR Has Just Dipped Under 1
As highlighted by CryptoQuant author Axel Adler Jr in a recent post, the Bitcoin Spent Output Profit Ratio (SOPR) for short-term holders has recently plunged into the red zone.
The SOPR is a crucial on-chain indicator that helps determine whether Bitcoin investors are selling at a profit or incurring losses. By analyzing the transaction history of each coin sold or transferred, the SOPR establishes if the current selling price exceeds the price at which the coins were initially acquired.
If the last transfer price of the coin was lower than its current market value, the sale is considered profit-taking. Conversely, if the price is higher, the transaction indicates loss-taking. The SOPR aggregates the realized profits and losses across the network to calculate its overall ratio.
In this context, the focus is particularly on the short-term holders, defined as investors who purchased their coins within the last 155 days.
A SOPR value above 1 indicates that short-term holders, as a group, are selling at a profit. Conversely, a value below 1 reflects a dominant trend of loss realization among these holders.
Here is a chart illustrating the trend in the 7-day simple moving average (SMA) of the Bitcoin short-term holder SOPR over the last decade:
The chart indicates that the 7-day SMA of the Bitcoin STH SOPR surged above the 1 mark during the final months of 2024, illustrating significant profit-taking by this group as Bitcoin reached new all-time highs.
This behavior is consistent with historical patterns where short-term holders have demonstrated a propensity to act on market fluctuations, such as rallies or downturns.
As the market experienced a downturn in recent weeks, the trend has shifted again. Profit-taking has diminished, making way for loss-taking. The 7-day SMA for the indicator has dropped to 0.99, indicating a shift where loss realization has outpaced profit-taking.
From the data presented in the chart, past capitulation events have typically coincided with peaks for Bitcoin’s price. However, the current level of loss-taking is not especially alarming, suggesting that a further decline may be needed before Bitcoin can recover bullish momentum.
BTC Price
In terms of price action, Bitcoin has seen a further decline, erasing recent recovery attempts. The cryptocurrency has experienced a 3% drop over the past day, bringing its current price to $91,600.
