Bitcoin Bullish: Trader Profit-Taking Stays Low Despite $71,000 Break

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As a seasoned crypto investor with battle scars from the 2017 bull run and the infamous “crypto winter” of 2018, I find myself intrigued by this latest analysis on Bitcoin’s short-term holder SOPR. The chart suggests that the average short-term holder is currently realizing a net profit, which is a good sign, but the levels are still relatively low compared to previous overheated conditions.

Recently, on-chain data indicates that short-term Bitcoin holders have been relatively modest in their profit-taking during the recent rally of the asset.

Bitcoin Short-Term Holder SOPR Is Currently At Relatively Low Levels

According to an analyst’s analysis in a CryptoQuant Quicktake article, the current Short-Term Holder SOPR remains within the range that historically indicates the asset may be overpriced or overbought for short-term holders over the past year.

In simpler terms, the “Spent Output Profit Ratio” (SOPR) is a tool that helps us understand if overall Bitcoin investors are currently realizing profits or incurring losses when they sell their Bitcoins.

If the value of this metric surpasses 1, it indicates that on average, users in the network are making a net gain by moving their coins. Conversely, when the value is below this threshold, it suggests that more often than not, users are experiencing losses while transferring their coins.

For our ongoing conversation, we’re focusing on the Spent Output Profit Ratio (SOPR) for a particular group of Bitcoin users: the Short-Term Holders (STHs). These are individuals who have recently acquired their Bitcoins, within the last 155 days.

Over time, investors who keep their investments tend to grow less inclined to sell them, due to statistical trends. However, since Long-Term Holders (STHs) are relatively new to holding these assets, they may not have built up as much resilience, making them more susceptible to panic selling when the market undergoes significant changes such as a rally or crash.

Now, here is a chart that shows the trend in the Bitcoin STH SOPR over the past year or so:

In my analysis, I’ve noticed that the Bitcoin STH SOPR has hovered above the 1 mark as per the graph provided. This trend indicates that the sellers within this group have been cashing out more profits than losses in their transactions.

Following a strong surge in Bitcoin’s price surpassing $71,000, institutional holders (STHs) appear to be cashing out their profits, causing an upward trend in the metric. Currently, this indicator stands at approximately 1.017.

From our conversation, it’s clear that the current value isn’t as high as one might expect. As per the quant’s analysis, the indicator tends to indicate overheating when it surpasses 1.03 during the recent consolidation period. The most recent data, though, is distinctly below this threshold.

In other words, there’s potential for the rally to expand further, given that significant sellers (STHs) might not yet have fully cashed out. This assumption is based on the possibility that the current market could follow the same trend as before, where the 1.03 boundary held true, since the STH selling strategy had previously reached higher levels prior to Bitcoin’s peak in March this year.

Keep an eye on its movement over the next few days, since its direction may serve as a clue for predicting future trends in the cryptocurrency’s value.

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2024-10-30 17:10