An analyst from CryptoQuant has explored how the SOPR for short-term Bitcoin holders could offer insights on optimal exit strategies.
Current Status of Bitcoin Short-Term Holder SOPR
In a CryptoQuant Quicktake article, the analyst examined the timing for selling and acquiring Bitcoin based on the actions of short-term holders. These holders are defined as individuals who purchased Bitcoin within the last 155 days.
Short-term holders (STHs) constitute one of the two primary segments of the Bitcoin market, with the other being long-term holders (LTHs). Unlike long-term investors, STHs are typically more responsive to market fluctuations, making their metrics sensitive to shifts.
The key indicator discussed is the Spent Output Profit Ratio (SOPR), which assesses whether investors are trading their coins for a profit or a loss.
The SOPR evaluates each wallet’s transaction history during sales to compare the selling price with the purchase price. Transactions where the selling price exceeds the acquisition price are classified as profit sales, while the reverse falls under loss sales.
A SOPR value above 1 indicates that holders, in general, are realizing net profits. Conversely, a value below 1 suggests that losses are prevalent.
Below is a chart that illustrates the trend of the Bitcoin SOPR for short-term holders over the last few years:
The above chart highlights two specific zones for the SOPR. The green lower zone indicates significant loss-taking by short-term holders, suggesting it might be a favorable time to accumulate more Bitcoin. Conversely, the red zone signifies profit-taking, presenting a potential selling opportunity. The analyst notes that these zones do not consistently pinpoint the extremes of Bitcoin’s price movements, advising gradual buying and selling as the indicator fluctuates between these areas.
Earlier this year, the STH SOPR fell into the green zone, signaling capitulation among this group. Recently, with price increases, the SOPR has climbed back above the 1 threshold but has yet to enter the red zone.
Thus, according to this metric, it may not yet be the right moment to start distributing Bitcoin.
Current Bitcoin Price
Bitcoin has experienced a recovery of over 10% in the past week, surpassing the $104,000 mark.
