Bitcoin Data Shows Profit Taking From Long-Term Holders Behind Decline To $40k

Keshav Verma

1 year ago

3 mins read

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As the Bitcoin price declines to $40k, on-chain data shows long-term holders have harvested some profits recently.

Bitcoin Long-Term Holder SOPR Shows Some Spikes Recently

As pointed out by an analyst in a CrypoQuant post, some BTC long-term holders seem to have participated in profit taking over the past day.

The relevant indicator here is the spent output profit ratio (or the SOPR in brief), which tells us about the profit ratio of the whole Bitcoin market.

The metric works by checking the past history of each coin being sold on the chain to see what price it was moved at before. If this previous price was less than the current one, then the coin moved at a profit.

Similarly, if the current price is higher, then the investor sold this coin at a loss. When the value of the SOPR is above one, it means investors are, on average, selling at a profit right now.

On the other hand, when the indicator’s value is less than one, it implies investors are selling at a loss overall at the moment. SOPR value exactly equal to one naturally means the market is just breaking even right now.

A version of this Bitcoin indicator takes into account only those coins that hadn’t moved for at least 155 days before being sold. This supply belongs to the long-term holders, and the metric is called LTH SOPR.

The below chart shows the trend in the BTC LTH SOPR over the course of the month so far:

The indicator's value seems to have spiked up recently | Source: CryptoQuant

The quant has marked the especially large spikes of the Bitcoin LTH SOPR in the above graph. At those points, the long-term holders look to have harvested some profits.

Such a trend has often been bearish, as can be seen in the chart that the price struggled following these large spikes.

So, it’s not surprising that the price of the crypto crashed down to $40k shortly after the latest spike in the indicator.

BTC Price

At the time of writing, Bitcoin’s price floats around $40.3k, down 7% in the last seven days. Over the past month, the crypto has lost 5% in value.

Below is a chart that shows the trend in the price of the coin over the last five days.

BTC's price seems to have plunged down over the past twenty-four hours | Source: BTCUSD on TradingView

Just a couple of days back, the price of Bitcoin seemed to be approaching another retest of $45k, but over the past day, the price has fallen down hard to $40k instead.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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