Crypto Markets Analysis: On-Chain Data Shows Short-Term Bitcoin Holders Turning Profits

Ether prices breaking above the upper range of Bollinger Bands is a hopeful sign; bitcoin appears poised to trade flat.

AccessTimeIconJan 5, 2023 at 9:16 p.m. UTC
Updated Jan 9, 2023 at 7:57 p.m. UTC
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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

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On-chain indicators show that short-term bitcoin holders are turning slight profits, but long-term holders are continuing to sell at a loss.

The Short Term Holder Spent Output Profit Ratio (STH-SOPR) and Long Term Holder Output Profit Ratio (LTH-SOPR) have recently suggested that short-term investors have found small opportunities even as the bear market lengthens and volatility remains low, but that long-term investors who bought at higher prices will have to wait for their windfalls.

The STH-SOPR is an on-chain indicator measuring the price sold versus the price paid for BTC less than 155 days (roughly five months) old.

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Short Term Holder SOPR (Glassnode)

When the figure is above 1, it indicates that the asset is being sold on average at a profit. When the figure is below 1, the asset is being sold at a loss.

The Long Term Holder Spent Output Profit Ratio (LTH-SOPR) is calculated in the same manner, but applies to bitcoin held in excess of 155 days.

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Long Term Holder SOPR (Glassnode)

Current STH-SOPR: 0.99

Current LTH-SOPR: 0.56

Most short-term BTC holders holding profitable positions likely entered their long positions in late November when bitcoin was trading at its five-month low of $15,599. The largest cryptocurrency by market capitalization has risen about 8% since then.

The STH-SOPR metric has been climbing since a Dec. 19 reading of 0.95. A previous reading above 1.0 occurred on Dec. 14, before declining the subsequent week.

The likely entry point may hint where markets perceive a potential BTC bottom.

From a timing vantage point, Nov. 21 trading activity coincides with a sharp expansion, and subsequent contraction of bitcoin volatility.

BTC’s average true range increased 43% between Nov. 1 and Nov. 21, and has fallen 64% since then. The $15,599 low falls just below a high volume node, when using the Volume Profile Visible Range (VPVR) tool to measure trading activity.

The combination of compressed volatility and high price agreement implies that short-term traders were comfortable with their entry points, and follow-on trading activity.

Long-term holders have not had the same fortune, as the LTH-SOPR fell below the profitability benchmark on Nov. 24, and has remained there since. But many long-term BTC holders are likely to maintain their holdings, rather than sell at a loss.

However, are many short-term BTC holders short-term in name only?

Investors truly holding a short-term outlook may wish to quickly capitalize on recent price appreciation should those prices push higher.

But those who have been holding bitcoin for only a short time but have longer-range goals may be unwilling to unload bitcoin. For this group, the accumulation of BTC between $15,999 and $16,500 months ago may reflect a level of price support.

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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX


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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX