Short-term Bitcoin Investors are Starting to Make Profit Again!

• The short-term holder’s (STH) spent output profit ratio (SOPR) 7-day moving average recently rose above 1.
• STH SOPR focuses on all wallets that hold coins for less than 155 days.
• STH SOPR rose above 1 in January of this year, indicating a reversal of the bull trend and has since been tested for support twice.

The short-term holder’s ability to make a profit again is considered a positive signal for price movement in the near future.

What Are Short-Term Holders Doing in Bitcoin?

The short-term outlook for Bitcoin (BTC) looks positive based on blockchain data showing that short-term holders are moving their coins while making a profit. According to blockchain analytics firm Glassnode, the spent output profit ratio (SOPR) 7-day moving average recently rose above 1 for short-term holders (STH).

Analysts at Blockware Solutions said in a weekly bulletin, “After a short period of coins moving at a loss, the STH-SOPR is now back above 1. This is a sign of delivery from short-term holders and gives a bullish signal for near-term price movement.”

What Are SOPR and STH-SOPR?

An STH SOPR above 1 indicates that the average short-term holder in the market is selling their coins at a profit. A reading below 1 is considered a sign of delivery, while a reading of 1 indicates that the average short-term holder is only breaking even.
SOPR is calculated by dividing the dollar value of a spend by the output creation value, reflecting the degree of profit realized for all coins moving on the chain. The SOPR for short-term holders focuses on all wallets that hold coins for less than 155 days.

STH-SOPR and Bull Markets

STH SOPR has historically remained above 1 during bull markets. This is understandable because rallies often offer short-term holders, active traders, or weak hands the opportunity to liquidate their positions at a higher price than their acquisition cost.

Areas near the 1 level also act as support during bull runs, as investors see their costs as a profitable buying opportunity, expecting price rallies to continue. Conversely, the 1 level acts as resistance during bear trends.

STH SOPR rose above 1 in January of this year, indicating a reversal of the bull trend and has since been tested for support twice. According to CoinOtag data, Bitcoin has rallied over 68% this year. At press time, the cryptocurrency was trading around $27,900 after hitting a peak of $28,441 overnight.