Emily Walker
An analyst has shared insights on how Bitcoin might still have potential for growth, based on a trending on-chain indicator.
Bitcoin Short-Term Holder SOPR Indicates Possible Growth
In a recent CryptoQuant analysis, the focus was on the Spent Output Profit Ratio (SOPR) for Bitcoin’s short-term holders. The SOPR is a metric that indicates whether investors are selling their Bitcoin for a profit or a loss.
This indicator examines the transaction history of each Bitcoin sold, comparing the previous sale price to the current market price. If a Bitcoin’s earlier transaction price was lower than its selling price, it signifies profit for the seller.
Conversely, transactions where the selling price is lower than the previous price indicate a loss. The SOPR combines these profits and losses across the network to create a comprehensive ratio.
In this analysis, the focus is specifically on short-term holders (STHs)—those who purchased Bitcoin within the last 155 days. This group tends to react quickly to market changes, selling their holdings during significant price fluctuations.
The following chart illustrates the trend in Bitcoin’s STH SOPR over the past few years:
The chart reveals that the STH SOPR has remained above the 1 mark in recent months, indicating that profits from sales are currently outpacing losses among short-term holders, suggesting a net profit for this group.
There has been a recent spike in this indicator, coinciding with Bitcoin’s rise to new all-time highs (ATHs). This trend suggests that STHs are increasingly capitalizing on the potential profits from the price increase.
In the past, profit-taking by STHs has often signaled peaks for Bitcoin. However, the current SOPR value remains well below levels typically associated with market exuberance.
While the risk of a market peak might not be immediate, the indicator is still within a range where local tops have formed before, as seen in the high of the first quarter earlier this year.
Going forward, it will be interesting to see if market demand can absorb the selling pressure from short-term holders or if another peak is on the horizon for Bitcoin.
Current BTC Price
Recently, Bitcoin’s price has stabilized, trading around $90,400.