Short-term Bitcoin holders are selling for profit

According to blockchain data, Bitcoin’s (BTC) short-term outlook is positive as short-term holders of the cryptocurrency are moving coins at a profit. The seven-day moving average of the short-term holder’s (STH) spent output profit ratio (SOPR) has recently moved back above 1, which is bullish for near-term price action as it shows capitulation from short-term holders. The short-term holder SOPR of more than 1 means the average short-term holder in the market is selling coins at a profit. The SOPR is calculated by dividing the realized dollar value of a spent output (UTXO) by the value at output creation to reflect the degree of realized profit for all coins moved on-chain. Bitcoin’s long-term holders also turned profitable a month ago, signaling a major bullish period ahead.

The STH SOPR has historically stayed above 1 during bull markets, allowing short-term holders to liquidate their holdings at a higher price than the acquisition cost. The area around 1 tends to act as a support level during bull runs, as holders see their cost basis as a profitable buying opportunity. On the other hand, level 1 acts as resistance during bearish trends. Bitcoin has rallied over 68% this year and is currently trading near $27,900.

Article edited by Sandali Handagama.