Journalist
Posted:
- The difference between the price of BTC and its STH-SOPR suggested a price correction.
- BTC’s momentum indicators fell, indicating growing coin distribution.
A bearish divergence has emerged between Bitcoin’s [BTC] price and the short-term holders’ spent output profit ratio (SOPR) (STH).
Short-Term Holder Spent Output Profit Ratio (STH-SOPR) is a metric used to assess the profitability of short-term holders of a given crypto asset.
It provides insight into whether investors – who hold a particular asset for three to six months – are making a profit.
If the STH-SOPR is above 1, it indicates that short-term holders are selling their coins for a profit on average. Conversely, if the STH-SOPR returns a value of less than 1, it suggests that these holders are selling at a loss.
A difference arises between an asset’s price and the STH-SOPR when they move in opposite directions. This often signals a change in investor sentiment.
It also means that the market is not accurately pricing the behavior of short-term holders.
In the case of BTC, a bearish divergence currently exists when the price of an asset registers growth while the STH-SOPR declines.
Data obtained from CryptoQuant revealed that the King’s STH-SOPR, assessed on a seven-day exponential moving average (EMA), has been trending downward since October 25. On the other hand, the price has increased by 10% since then.
Source: CryptoQuant
In a recent one reportPseudonymous CryptoQuant analyst Crypto Sunmoon noted that historically, a bearish divergence between the price of BTC and its STH-SOPR has typically been followed by a price decline.
According to Zonnemaan:
“The current bearish divergence between STH and SOPR has been going on for over a month now, so we should be prepared for a drop in the price of Bitcoin.”
Source: CryptoQuant
Bitcoin Bulls Under Fire?
As BTC continued to encounter resistance at the $38,000 price level, weighted sentiment turned negative again. At the time of writing, the king coin’s weighted sentiment was -1.163, data out Santiment showed.
Source: Santiment
The continued profit-taking activity has caused coinholder sentiment to slowly change from positive to negative.
How many Worth 1,10,100 BTC today?
While the major momentum indicators remained above their respective midlines on a daily chart at the time of writing, BTC’s Relative Strength Index (RSI) and Money Flow Index (MFI) indicators have been steadily declining over the past two weeks.
This showed that coin distribution was gaining momentum even as the bulls continued to maintain control of the market.
Source: BTC/USDT on TradingView