Data Shows Bitcoin Short-Term Holders Realizing Significant Losses

Keshav Verma

1 year ago

3 mins read

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On-chain data shows that Bitcoin short-term holders have now started to realize significant losses. This could prove to be a bearish signal for the crypto.

Bitcoin Short-Term Holders Are Taking Significant Losses

As pointed out by an analyst in a CryptoQuant post, the BTC market is now looking at significant losses being realized. This trend may be reminiscent of the May 2021 crash.

The relevant indicator here is the Spent Output Profit Ratio (SOPR), which is an on-chain metric. The SOPR measures the profit ratio of the overall market to check whether investors are, on an average, in profit or loss.

The indicator works by looking at the price each coin on the chain was bought at and comparing it with the selling price.

When the value of the SOPR is above 1, it means coins during the period sold at a profit. On the other hand, values below 1 suggest holders were selling at a loss.

Also, naturally, when the indicator’s value is exactly equal to one, the investors were, on average, breaking even for the specific timescale.

A modified version of the metric is the Short-Term Holder SOPR (STH-SOPR), which shows the SOPR for coins that were held for less than 155 days.

Related Reading | Twin Peaks: Comparing The Two 2021 Bitcoin Tops

Now, here is a chart that highlights the trend in the Bitcoin STH-SOPR over the past few years:

Looks like the value of the indicator has gone down recently | Source: CryptoQuant

As you can see in the above graph, the STH-SOPR has decreased in value recently, and the metric is now below one.

This implies that these short-term holders have now started to realize their losses as the price of Bitcoin continues to decline.

The analyst in the post thinks this trend may be similar to that seen in the aftermath of the May crash. And so, the coin may continue to range sideways for a while, just like then, before observing some uptrend.

BTC Price

At the time of writing, Bitcoin’s price floats around $49k, down 0.5% in the last seven days. Over the past thirty days, the crypto has lost 20% in value.

The below chart shows the trend in the price of BTC over the last five days.

BTC's price has again continued its sideways trend in the past few days | Source: BTCUSD on TradingView

Bitcoin has been in consolidation for a while now as the price shows no signs of recovery. At the moment, it’s unclear when this sideways movement may end, but if the STH-SOPR is anything to go by, this trend may last a while longer, just like in May.

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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