Short-Term BTC Holders Take Losses Again

After 4 months of trading above breakeven, the SOPR (Spent Output Profit Ratio) for short-term holders (STH), smoothed by a 30-day moving average, has fallen below 1 again. According to experts, this shows that short-term Bitcoin investors have started to take losses. This usually reflects a decline in confidence among speculators who are more sensitive to price fluctuations. Such dynamics may signal a temporary respite in the current bull cycle.

That said, despite the BTC price rally from $60,000 to around $125,000 over the past year, the SOPR STH indicator has been making downward peaks rather than the spikes that typically accompany hype phases. This suggests that the rally this time around has been driven by more established or institutional participants rather than the retail investors who tend to create peaks in Extreme Greed zones.

Historically, market tops in the BTC price have only been confirmed when the SOPR STH has reached extreme greed values. The absence of this signal in the current cycle suggests that the market may be far from a full-fledged overheating phase and is still in a long-term bullish trend.

Short-term holders taking losses may also reflect their reaction to local volatility, but it does not necessarily indicate a trend change. If the price finds stable support in the coming weeks, this could be a prerequisite for a new growth momentum.

A return of STH SOPR above 1 would reaffirm the prevalence of profitable transactions by short-term holders, which historically coincides with the restoration of the upward market momentum. This scenario would mean a continuation of the current trend and increases the chances of reaching new price highs.

The current situation also shows that retail investors are still cautious despite the rise in BTC price. This could lead to a more stable market without the sharp overbought conditions that characterized past cycles.

Source: cryptonews.net