Bitcoin SOPR Reveals Massive Profit-Taking By Long-Term Holders — Is BTC In Trouble?

Bitcoin regained price levels above $90,000 after trading beneath this key zone for the majority of the past two weeks. Within this period, the premier cryptocurrency saw a decline to as low as $80,600, marking a more than 10% deviation from the aforementioned support. 

As the price stands fairly over $90,000, there seems to be a recovery underway. However, a closer monitoring of on-chain activity has revealed that the reality is diametrically opposite to widespread expectation.

LTH-STH SOPR Ratio Spikes To 2.63 — What This Means

In a recent QuickTake post on CryptoQuant, the on-chain analytics platform Arab Chain reveals a shift within the internal structures of the Bitcoin market. This report revolves around readings obtained from the Binance: BTC SOPR Ratio (LTH – STH) metric, which assesses and compares the profit-taking behavior of Bitcoin’s long-term holders (LTH) to that of its short-term holders (STH). 

Arab Chain highlights that the LTH-STH ratio recently saw a spike to 2.63, a reading which marks the highest level put in since August. Notably, this spike in the SOPR index comes amid Bitcoin’s rise to around $90,000, signaling an underlying spike in LTH sell-off despite this modest rebound.

This notion is confirmed by the Long-Term Holder SOPR itself, which reportedly to 2.58, indicating that members of Bitcoin’s most influential trend setters are currently exiting the market in deep profits.  Normally, the sharp move in the LTH–STH ratio, especially one that causes the establishment of a multi-month high,  usually represents a period of selling pressure that typically precedes price corrections. However, the current situation steers slightly away from this standard.

‘Profit-Taking Phase May Go On For Several Weeks’ — Analyst 

As the LTH SOPR reads 2.58, the STH SOPR stands at levels around the 0.98 mark, suggesting that the flagship cryptocurrency’s short-term holders are selling off their holdings either at break-even or even with some losses incurred. 

The market imbalance, therefore, reveals itself in that “long-term investors are capturing substantial profits and capitalizing on previous rallies to sell off, while short-term investors are unable to achieve clear gains.” Arab Chain explains that if the Bitcoin price decline should intensify, there could be additional acceleration dedicated to its fall down south. 

Historically, widening gaps between LTH and STH SOPR have often preceded defined movements in BTC’s market cycle. This behavior, according to Arab Chain, reveals that the market is likely entering a typical “cash-for-profit” phase, where its major holders sell off their holdings. Seeing as a surge of an almost comparable magnitude last took place in August, the firm conjectures that the market could see a major price reset, as opposed to the minor price fluctuation investors may be anticipating.

As of this writing, Bitcoin is worth about $90,652, recording no significant movement over the past day.