Bullish sign: Long-term holders’ Bitcoins sell off at a profit after 11 months 2023


On-chain data shows that long-term holders are making a “profit” from the sale of their units for the first time in nearly a year. In the past, revivals of this form of profitability among long-term holders have occurred before major market swings.

According to CoinDesk, the seven-day moving average of Bitcoin’s “long-term holders’ spent output ratio” or “SOPR” for short, has reached above the level of “one” for the first time since May 2022 (May 1401).

This indicator actually measures the ratio between the dollar value of an unspent output or UTXO at the time of creation to the price at which that output is spent. In simpler terms, if a wallet with the hypothetical name X sends one bitcoin to another hypothetical wallet with the name Y, and the market price of bitcoin at the moment of sending this one unit is higher than the price at which these bitcoins were bought at that level ( or transferred to wallet X), it can be said that this transfer was a profitable sale.

According to the definition of Glassnod’s analytical platform, in this index, only outputs that have been spent after 155 days are considered, and with this separation, the behavior of long-term investors can be examined.

James Check, an analyst at Glassnod, said:

The special version of this index for long-term holders (SOPR) better reflects macro market changes. After experiencing a long period (11 months) of losses in this index, the payouts of long-term holders have become profitable for them again; A structure similar to transition points (change of market trend from rising to falling) of previous cycles.

SOPR of long-term holders of Bitcoin.

Now, the return of this index to above level 1 coincides with the recovery of Bitcoin price. Bitcoin is currently trading around $29,000, up 90% from its low of $15,460 in November last year.

As can be seen from the image above, in 2020, 2019 and 2015, this index has returned to above level one, and at the same time, long-term upward price trends have been formed. It can also be seen that the sharp drops of this index below level 1 have marked the periods of mass selling by investors.

Warning for short term

It is true that this index reaching above level one can be a sign for the market to rise in the long term, but on the other hand, there is a possibility that it will slow down the rate of price growth in the short term.

Check says in this regard:

Many of the current long-term holders of the market are those who bought in the 2021-2022 cycle and suffered losses on this investment. So they are likely to create resistance (with their sales) on the way to price recovery.

Analyst firm CryptoQuant shares the same opinion and says that a return to profitability could strengthen the selling pressure in the market.

CryptoQuant wrote in its report:

From an on-chain data perspective, the price of Bitcoin may face downward pressure due to increased selling pressure among whales and long-term holders who can now sell their holdings at the biggest profit since almost a year.


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