A measure called the “LTH-SOPR” is showing that people who have held onto Bitcoin for a long time are selling it at a profit. This means that the time when the value of Bitcoin was going down a lot (called a “bear market”) might be over now.
People who have owned Bitcoin for a long time are making money from it for the first time in almost a year, according to information stored in blockchain. In the past, this has often happened just before the price of Bitcoin goes up a lot.
The average value of the “LTH-SOPR” for Bitcoin has gone above 1 for the past week, which hasn’t happened since May 2022. This information comes from Glassnode, a company that tracks data about Bitcoin.
The SOPR is a way of measuring how much money people make when they sell their Bitcoin. It compares how much the Bitcoin was worth when they first got it to how much they sell it for later. UTXO is like leftover money in your wallet that you haven’t spent yet.
If someone sends one Bitcoin from their wallet to another wallet, it’s assumed that they’re selling it. If the value of that Bitcoin when it was first acquired was less than what it was sold for, the seller has made a profit. When the SOPR ratio is above 1, it means that the average profit for all Bitcoin sales is positive.
The “long-term holder SOPR” looks at Bitcoin that has been held for at least 155 days and then moved around in the blockchain network.
According to Glassnode’s analyst James Check, the “long-term holder SOPR” is a better indicator of big changes in the overall Bitcoin market. When the LTH-SOPR ratio is below 1 for a long time, it means that people are selling Bitcoin for less than they paid for it. But now, the ratio has gone above 1, which suggests that people are selling Bitcoin at a profit again. This is a pattern that has happened in previous cycles of Bitcoin’s market history.
Bitcoin’s price had dropped a lot before, but it has been going up again recently. It’s currently worth $29,500, which is much higher than the low of $15,460 it was worth in November of last year. This increase in price is around 90%.
In the past, there were three instances when the SOPR ratio crossed above one, in May 2020, May 2019, and November 2015. All these times, bitcoin’s price went up and led to long bull markets that lasted for many years.
According to the chart, when the ratio is below 1, it has often marked the time when investors give up hope, and the market reaches its lowest point. When the ratio is above 10, it has often marked the time when the market is at its peak.
SOPR above 1 to create resistance
While the ratio’s crossover above zero might imply a positive market cycle ahead, in the short run, it could slow down the cryptocurrency’s rise.
James Check from Glassnode has stated that the group of long-term holders of Bitcoin, who bought during the 2021-2022 cycle, are likely to sell their coins and create resistance as the market recovers.
The company CryptoQuant, based in South Korea, has expressed a similar view, stating that a return to profit may lead to more selling and pressure on the market.
According to CryptoQuant, the data shows that bitcoin’s price could face downward pressure due to large investors and long-term holders selling their coins to realize profits, which hasn’t happened in almost a year.
