A recent assessment has surfaced showing that Bitcoin’s long-term holders are slowly letting go of their big gains, and this could impact prices in any way depending on further developments.
Average monthly SOPR for long-term holders falls below 1
In a recent one QuickTake post on CryptoQuant, a pseudonymous on-chain analyst, Darkfost, reveals that long-term holders of Bitcoin are entering a vulnerable phase in the current cycle. This post is based on measurements obtained from the BTC: Long-Term Holders (LTH) SOPR metric, which tracks whether coins moved by Long-Term Holders are done at a profit or at a loss.
A SOPR value above 1 indicates that holders of this category are realizing an average profit, while a value below 1 indicates that these coins are moving at a loss. According to Darkfost, current readings of the SOPR metric have fallen below the critical level 1 and are currently around 0.98.
This is a sign that Bitcoin LTHs, which are typically the strongest investor hands in the market, are starting to experience monthly losses. Interestingly, the scenario is slightly different on the annual time frame.
Annual LTH SOPR still positive, but trend is declining – analyst
Darkfost further highlights that while the monthly time frame is trending toward the red zone, the annualized SOPR is still well into positive territory, with readings of around 1.84. According to the analyst, this implicitly represents approximately 84% of the average realized profit.
However, year-over-year profits have been on a downward trend and have been slowly declining. Notably, the LTH SOPR has not exceeded 3.4 on the charts during the current cycle, a value that is approximately half of the values during the previous cycle’s peak. Interestingly, this is also less than four times the peak of the two previous cycles, indicating a less impulsive distribution among this investor cohort.
Furthermore, Darkfost calls out historical data showing that bear markets only formed after the SOPR fell towards the 0.6 region, a level that correlates with average realized losses of around 40%. Although the current value of the metric is below 1 every month, it is still far from the zone that represents capitulation.
For the time being, long-term holders have entered a transition phase. In the scenario where the profits realized by Long-Term Holder continue to decline, the selling pressure could in turn erode from this side. At the time of writing, the Bitcoin price is at a valuation of around $64,247, reflecting a loss of 4.85% over the past day.