In a recent post on X, the online analytics platform Checkonchain discussed the recent change in behavior of short-term Bitcoin holders. The indicator shared by Checkonchain is the Spending Output Profit Ratio (SOPR), which tells us whether BTC investors are selling/moving their coins at a profit or loss.
When the value of this index is greater than 1, it means that all holders are participating in profit-taking activities. On the other hand, a value lower than this indicates that the market is experiencing net losses. In the context of the current discussion, we are not concerned with the SOPR of the entire network, but only with a specific segment: short-term holders (STH). This group includes holders who have purchased their coins within the last 155 days.
According to statistics, the longer investors hold their coins, the lower the likelihood of selling. However, since the STH group consists of short-term holders, the confidence of these members is often weak, with panic selling occurring frequently.
Recently, Bitcoin has witnessed a decline, so it can be expected that STH will have a certain reaction. Below is a chart shared by an analytics company, showing the nature of the sell-off that this group has participated in.
As can be seen on the chart, the SOPR index of Bitcoin STH has surged to a notable level above 1 when the price of this asset reached its all-time high (ATH), indicating that these fickle investors seized the opportunity of the price rally to take profits. However, profit-taking has decreased during the consolidation phase following this peak, and the recent price decline has pushed this index below 1.
The indicator currently has a value of 0.99, remaining almost neutral, but it indicates that some top buyers have started to capitulate. As Checkonchain explains, "many recent top buyers and 'weaker' players are selling around their entry prices and saying 'let me get out'".
In the past, surrender events from Bitcoin STH often meant that many weak sellers were present, facilitating the formation of a bottom for the cryptocurrency. Sometimes, these events can last for a while before the market reverses, as happened before the bottom in April.
But interestingly, the STH SOPR dropping into the loss zone in June only lasted for a short time and led to a quick reversal of this asset. Currently, it is still unclear which trend will occur with BTC this time.