Short-Term Holders Profitable: Bull Run Indicator or Potential Market Shift?

Intricate blockchain with various shades of green, short-term holders selling coins (depicted as golden coins descending from wallets), a rising graph as the background, soft golden glow surrounding scene, Baroque-inspired styling, confident mood, hint of unpredictability.

Bitcoin’s (BTC) future seems on the right track as blockchain data reveals that short-term holders are moving coins to generate a profit. Based on the seven-day moving average of the short-term holder’s (STH) spent output profit ratio (SOPR), the value is now above one, according to blockchain analytics firm Glassnode.

The current optimistic outlook is attributed to the capitulation from short-term holders, as expressed by Blockware Solutions analysts in their weekly newsletter. As the STH SOPR exceeds one, it indicates that the average short-term holder in the market is selling coins for profit. When the value is below one, it’s considered a sign of capitulation, and a value of one implies break-even for the average short-term holder.

To calculate SOPR, divide the realized dollar value of a spent output (UTXO) by the value at output creation. It reflects the degree of realized profit for all coins moved on-chain. The focus is on all wallets that have held onto their coins for less than 155 days. Generally, during bull markets, the STH SOPR stays above one. It is expected, as rallies enable short-term holders – mostly new entrants, active traders, or weak hands – to liquidate their holdings at higher prices than the acquisition cost.

Furthermore, the area surrounding one often acts as a support level during bull runs, as holders expecting continued price rallies perceive their cost basis as a profitable buying opportunity. In contrast, the level one serves as a resistance during bearish trends. This year, the SOPR moved above one in January, signifying a bullish trend reversal and has tested the support level twice since then. Bitcoin has indeed rallied over 68% this year, and at the time of writing, it stands around $27,900, with a high of $28,441 during overnight trading.

On the other hand, Bitcoin’s long-term holders turned profitable a month ago, suggesting an extremely bullish period lies ahead. Regardless of the current optimistic outlook, there is always a possibility of unforeseen fluctuations and trends in the cryptocurrency market. Therefore, it is essential for enthusiasts to stay informed and updated, follow market trends, and make calculated decisions based on thorough analysis.

Source: Coindesk

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