Bitcoin Declines Slightly As Short-Term Holders Take Profits
After surging to as high as $20.9k, Bitcoin has today observed a slight decline back into the low $20k levels as a result of profit taking from short-term holders.
Bitcoin Short-Term Holder SOPR Has Been Elevated Over The Past Two Days
As pointed out by an analyst in a CryptoQuant post, the short-term holders seem to be using the latest price rise for profit taking.
The relevant indicator here is the “Spent Output Profit Ratio” (SOPR), which tells us whether the average investor is selling Bitcoin at a profit or at a loss right now.
When the value of this metric is greater than 1, it means the overall market is realizing some amount of profit currently. On the other hand, values below the threshold suggest the holders as a whole are selling at a loss
Naturally, values of the SOPR exactly equal to one suggest that the investors are just breaking even on their selling at the moment.
Now, there is a cohort in the Bitcoin market called the “short-term holders” (STHs), which includes all investors who have been holding their coins since less than 155 days ago.
Here is a chart that shows the trend in the BTC SOPR specifically for this holder group over the last couple of weeks:
The value of the metric seems to have spiked up in recent days | Source: CryptoQuant
As you can see in the above graph, the Bitcoin STH SOPR has been elevated above the 1 level during the last two days or so.
This rise has coincided with the BTC price finally surging up after moving sideways around $19k for a long while. This suggests that these investors are using this opportunity to harvest some profits.
Such profit-taking is generally bearish for the price of the crypto, and as the chart displays, there were three instances of this kind of trend during the past two weeks. All of those profit realization sprees from the STHs resulted in the price going back down after a short-term rise.
This time as well the BTC price has gone down from its high of $20.9k to as low as below $20.1k. before retracing back up some to the current level.
At the time of writing, Bitcoin’s price floats around $20.5k, up 8% in the last seven days. Over the past month, the crypto has gained 7% in value.
Below is a chart that shows the trend in the price of the coin over the last five days.
Looks like the value of the crypto has gone down over the last couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com