- Gaah, in their publication on CryptoQuant, explained the current BTC buying/selling situation using the Short-Term Holder-Spent Output Profit Ratio (STH-SOPR).
- As of the time of writing, Bitcoin’s 30-day MVRV ratio was -3.42%, which is in line with the STH-SOPR indicators.
- In February, Gaah reported that the STH-SOPR had reached a 14-month high. During this period, short-term holders, especially from the retail sector, accumulated, and as a result, the Bitcoin price saw a significant increase.
Losses for short-term investors in Bitcoin are increasing, but investors should remain patient because this historical event signals an upward trend.
Bitcoin Investors Shouldn’t Be Disappointed
Imagine this scenario: You bought Bitcoin earlier in the year at around $30,000, expecting the price to rise to $35,000 or $40,000. But it didn’t happen. Then you remember how low your portfolio has become, and while listening to Johnny Cash’s “I’m Busted,” the lyrics “The cow’s not giving milk, the chicken ain’t laying eggs” come to mind.
Think about how you would feel or what action you would take. This situation seems to resemble what crypto trader Gaah, known by their pseudonym, is experiencing with Bitcoin Short-Term Holders (STHs).
Gaah, in their publication on CryptoQuant, explained the current BTC buying/selling situation using the Short-Term Holder-Spent Output Profit Ratio (STH-SOPR). At the time of writing, STH-SOPR was at an eight-month low.
STH-SOPR represents the ratio of spent outputs (live for more than 1 hour and less than 155 days) in profit within the time window. Values above 1 are sold at a profit, while values below 1 are sold at a loss.
Gaah mentioned that the metric showed a similar movement when Bitcoin was priced around $17,000, indicating that the current losses are of similar magnitude to those that occurred eight months ago.
In February, Gaah reported that the STH-SOPR had reached a 14-month high. During this period, short-term holders, especially from the retail sector, accumulated, and as a result, the Bitcoin price saw a significant increase.
Investors Should Be Patient
Meanwhile, the trader pointed out that this is not a time for fear but rather an opportunity waiting around the corner. They supported this view with historical data and said:
“Historically, reaching values inside the green box when losses by investors are extremely large has created significant opportunities for later big gains.”
Let’s consider the Market Value to Realized Value (MVRV) ratio to assess whether the current downward trend presents an accumulation opportunity. The MVRV ratio is used to evaluate the valuation status of an asset while assessing profitability.
As of the time of writing, Bitcoin’s 30-day MVRV ratio was -3.42%, which is in line with the STH-SOPR indicators. However, it also implies that Bitcoin is in an accumulation zone, and investors deciding to accumulate could potentially achieve greater gains.
Gaah concluded their analysis by stating that a rise could occur in the near future but also noted the potential for further declines before an upward movement.
