The latest on-chain data reveals that a key Bitcoin metric is currently retesting a level traditionally regarded as a dividing line between bearish and bullish trends.
Glassnode, a well-known on-chain analytics firm, recently posted on X about an intriguing pattern in the Spent Output Profit Ratio (SOPR) of Bitcoin’s short-term holders.
For those unfamiliar, SOPR is an on-chain indicator that helps investors ascertain whether Bitcoin is being sold or moved at a profit or a loss. If the SOPR value exceeds 1, it suggests that the average Bitcoin holder is selling at a profit. Conversely, a value below 1 signals that the market is incurring a loss overall.
When SOPR hovers around the 1 mark, it means that profits and losses are balancing each other out, indicating that the average holder is just breaking even on their transactions.
This time, our focus is on short-term holders (STHs), investors who have acquired Bitcoin within the last 155 days. Glassnode has provided a chart showing the 7-day moving average of Bitcoin’s STH SOPR over the past few months.
The chart indicates that earlier this year, the Bitcoin STH SOPR dipped below 1, suggesting that as Bitcoin’s price followed a bearish trend, STHs resorted to selling at a loss. However, there’s been a recovery recently, and the metric has climbed back to the break-even point. Glassnode notes, “Historically, surpassing 1.0 highlights a change in momentum, whereas failure to do so could reignite selling pressure.”
Crossing the 1 mark isn’t straightforward, as it’s a significant psychological threshold for STHs. These individuals, often either new to the market or less committed long-term, are prone to panic-sell. When the STH SOPR reaches 1, it indicates these investors, who previously sold at a loss, are again breaking even. At this stage, selling pressure might rise as STHs try to recover their investments.
The last time Bitcoin’s SOPR tested this level was in January. The chart shows that there was indeed a breakout, but it was brief. It remains to be seen if the metric will enter the profit zone this time or not.
In terms of Bitcoin’s current price, the value has been slipping over the past few days, dropping to around $94,500.
The accompanying charts from Glassnode on X and TradingView capture these fluctuations, painting a detailed picture of Bitcoin’s current state in the market.
