Bitcoin STH SOPR Breaks Above 1 For First Time Since December

On-chain data shows the Bitcoin short-term holder SOPR has broken above one for the first time since December 2021.

Bitcoin Short-Term Holders Return To Profit Once Again

As pointed out by an analyst in a CryptoQuant post, the BTC STH SOPR has once more broken past the “one” barrier.

The “Spent Output Profit Ratio” (or SOPR in short) is a Bitcoin indicator that tells us whether coins selling right now are selling at a profit or a loss.

The metric works by looking at the price history of each coin being sold on the chain to see what price it last moved at.

If the last price was less than the current one, then the coin has been sold at a profit. Similarly, a loss is when the current price is lesser.

When the value of the Bitcoin SOPR is less than one, it means investors are, on an average, selling at a loss at the moment. On the other hand, ratio values above one imply that the overall market is realizing a profit currently.

Related Reading | Can The 600-Day MA Support Line Push Bitcoin Again?

A modified version of the indicator shows the profit ratio for only those coins that were held for less than 155 days before being sold.

Such coins belong to a cohort of investors called the “short-term holders.” The below chart shows the trend in the Bitcoin STH SOPR (30DMA) over the past year:

The indicator seems to have just crossed over the "one" mark recently | Source: CryptoQuant

As you can see in the above graph, the Bitcoin STH SOPR has broken above one once again over the last few days. This is the first time that short-term holders have been selling at a profit since December of last year.

The significance of the SOPR equal to 1 line is that it acts as a break-even point. The mark has acted as support for the price of the crypto in the past.

Related Reading | Bitcoin Mimics Textbook Market Sentiment Cycle, What Happens When Confidence Returns?

But also, because of it being a break-even point, it has also acted as resistance before. Reaching the mark psychologically feels like getting their money “back” to investors who were in loss previously so they tend to sell around this mark, hence leading to it becoming resistance.

Just a month or ago the metric retested the level, but it failed and rebounded back down. It remains to be seen now whether this time the Bitcoin STH SOPR will hold above one or not.

BTC Price

At the time of writing, Bitcoin’s price trades around $41.2k, down 5% in the past week.

BTC's price shows some recovery | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com