Long-Term Bitcoin Holders Are Profitable for First Time in 11 Months, Blockchain Data Shows

Bitcoin's "long-term holder spent output profitability ratio" shows coins moved on-chain that have a lifespan of at least 155 days or higher are being sold for a profit.

AccessTimeIconApr 28, 2023 at 8:44 a.m. UTC
Updated Jan 24, 2024 at 12:29 a.m. UTC

Blockchain data shows long-term holders of bitcoin (BTC) are profitable for the first in almost a year. Historically, renewed profitability for long-term holders has presaged major market rallies.

The seven-day average of bitcoin's "long-term holder spent output profit ratio," or LTH-SOPR, has crossed above one for the first time since May 2022, according to data tracking firm Glassnode.

The SOPR is the ratio in U.S. dollar value of unspent transaction output, or UTXO, at its creation to the value at which the concerned wallet spends the UTXO on-chain. UTXO is a transaction output that hasn't been used as an input in a new transaction. You can think of UTXOs as leftover change money in your pocket.

If wallet X sends one bitcoin to wallet Y, it is assumed that the former is spending or selling coins to the latter. If the value at which X moved coins to Y was higher than at acquisition, X is said to have realized profit. A SOPR ratio above 1 indicates that coins moved, on average, are being sold for a profit.

The long-term holder SOPR focuses on coins moved on-chain that have a lifespan of at least 155 days.

"The long-term holder SOPR variant tends to reflect macro market shifts better. Following an extended period of realized losses (LTH-SOPR < 1), the LTH cohort is finally transitioning back into a regime of profitable spending, a structure similar once again to past cycle transition points," Glassnode analyst James Check said in a weekly note.

The ratio has crossed above one for the first time since May 2022. (James Check, Glassnode)
The ratio has crossed above one for the first time since May 2022. (James Check, Glassnode)

The ratio's latest move above one comes amid bitcoin's recovery from bear market depths. At the current price of $29,500, the cryptocurrency is up 90% from the low of $15,460 recorded last November.

The ratio's previous crossovers dated above one – dated May 2020, May 2019 and November 2015 – also coincided with recovery rallies that eventually translated into multi-year bull runs.

The chart shows extreme sub-1 readings have historically marked periods of investor capitulation, which coincided with market bottoms. Meanwhile, values above 10 have signaled market tops.

SOPR above one to create resistance

While the ratio's crossover above zero might imply a positive market cycle ahead, in the short run, it could slow down the cryptocurrency's rise.

"The LTH cohort at the moment consists of many 2021-22 cycle holders, many of whom remain underwater and are likely to create resistance throughout the market recovery," Check noted.

South Korea-based analytics firm CryptoQuant voiced a similar opinion, saying a return to profitability might inject selling pressure to the market.

"From an on-chain data perspective, bitcoin's price could be pressured to the downside by higher spending from whales [large investors] and long-term holders taking profits at the highest margin in almost a year," CryptoQuant said in a report shared with CoinDesk.

Edited by Parikshit Mishra.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.