A long-term SOPR holder holding bitcoin may indicate that the cryptocurrency is still a third of the way through the latest bear market.
Bitcoin’s long-term 20-day SMA holder has just 86 days at the bottom
As pointed out by an analyst at CryptoQuant MailCrypto is still only 1/3 of the 260-day average historical low.
The relevant pointer here is “Output Profit Ratio(or SOPR for short), which tells us whether the average bitcoin investor is selling at a profit or a loss at the moment.
The metric works by looking at the history of each coin sold in the chain to see what price it was last quoted. If the previous selling price was lower than the last BTC value, the coin just sold at a profit. Whereas if the last value is greater than the present value, that particular currency has realized some loss.
When the value of the SOPR is greater than one, it means that the market as a whole is selling at a profit at the moment.
On the other hand, the pointer being less than one indicates that the normal holder is moving coins at a loss at the moment.
“Long Term Holders” (LTHs) are the Bitcoin pool that includes all investors who have held their coins for at least 155 days without selling or transferring them.
Now, here is a chart showing the trend in BTC SOPR (20-Day Moving Average) specifically for these LTHs over the past several years:
Looks like the value of the metric has been pretty low recently | Source: CryptoQuant
As you can see in the above chart, Bitcoin LTH SOPR (20-day SMA) has fallen below the “one” mark a while ago.
Also, in the chart, Quantum has identified all relevant trend areas of the indicator in relation to the bear market.
Historical troughs seem to have continued when the scale is stuck below break-even.
On average, previous bear markets lasted about 260 days based on LTH SOPR. In the current cycle, the coin has so far been 86 days at the bottom.
This may suggest that if Bitcoin ends this bear market around the same time as the average, the cryptocurrency is still only a third of the way through.
At the time of writing this report, Bitcoin price It is floating around $23,000, down 2% in the past week. Over the past month, the value of the coin has increased by 13%.
The value of the crypto seems to have been moving sideways during the last few days | Source: BTCUSD on TradingView
Featured image from mana5280 on Unsplash.com, charts from TradingView.com, CryptoQuant.com