On-chain data shows that short-term Bitcoin holder SOPR is approaching the value of the “break-even point,” a point that has served as resistance to the cryptocurrency’s price in the past.
Bitcoin short-term SOPR holder rises, nears “1” value
As pointed out by an analyst at CryptoQuant MailSelling pressure from short-term holders may increase if SOPR continues to rise.
The “Output Profit Ratio“(or SOPR for short) is an indicator that tells us whether the Bitcoin market as a whole is currently selling at a profit or a loss.
The scale works by looking at the sequential history of each coin being sold to see what price it was sold at before that. If the previous value of any currency was less than the current price, then that currency has moved with a profit now.
Whereas, the last sale price is lower than the last price, which means that selling the currency leads to a loss.
When the value of the SOPR is greater than one, it means that the total market is selling at a profit at the moment. On the other hand, values below the minimum indicate that the average investor is moving BTC at a loss.
right Now , “short term owners“(STHs) includes all Bitcoin investors who sell their coins after holding them for less than 155 days. The chart below shows the trend in SOPR specifically for this group.
The value of the metric seems to have observed some rise in recent days | Source: CryptoQuant
As you can see in the chart above, Bitcoin STH SOPR fell below “1” a few months ago, indicating that these owners were selling at a loss.
During these past few months, the indicator tried to escape from this area twice, but it failed both times and the price also fell at the same time.
The reason behind this trend is that the “SOPR = 1” line represents the “break-even” point of the market. With the scale reaching this level, investors who were previously at a loss now believe they have their money back and are therefore selling their coins here.
This results in higher-than-normal selling pressure from STHs at this mark, providing resistance to the Bitcoin price.
Recently, the SOPR of this royal group has risen and is now approaching the threshold again. If the previous trend is anything to go by, once the value has been tested, BTC could see some downside this time as well.
At the time of writing this report, Bitcoin price It is floating around $23.7K, up 5% in the past seven days.
Looks like the price of the coin has been consolidating sideways during the last few days | Source: BTCUSD on TradingView
Featured image from Amjith S on Unsplash.com, charts from TradingView.com, CryptoQuant.com