Among these indicators, the spent earnings to profit ratio (SOPR) for long-term holders has become a critical tool for assessing investor sentiment and market strength.
Long-term holders, defined as investors who have held Bitcoin for more than 155 days, are often seen as a stabilizing force in the market. Their sales patterns can significantly influence price trends, making SOPR an indicator worth keeping an eye on.
Long-term shareholder trends and market sentiment
Recent analysis by CryptoQuant analyst known as Cryptoavails highlights that Bitcoin’s long-term holder SOPR continues to show notable patterns as Bitcoin’s price trends upward.
Historically, SOPR values above 1 indicate that long-term holders are selling at a profit, while values below 1 suggest that they are selling their holdings at a loss.
This behavior reflects broader market confidence or capitulation during periods of declining prices. Currently, SOPR remains consistently above 1, signaling that long-term holders are selling at a profit without putting significant downward pressure on Bitcoin’s price.
Cryptoavails’ analysis tracks key milestones in the Bitcoin market over the past two years, highlighting significant changes in SOPR values. For example, at the beginning of 2022, the SOPR indicator showed high volatility with frequent jumps, indicating intense profit-taking activity by long-term holders.
Amid these sales, Bitcoin’s price trended lower, reflecting continued selling pressure during this period. This trend gradually reversed in late 2022 and early 2023, with SOPR largely remaining below 1, indicating that long-term holders were selling at a loss as the market sought to find stability.
By mid-2023, SOPR began to rise, signaling renewed confidence among long-term investors. The indicator consistently approached or exceeded the critical level of 1, suggesting that long-term holders were again selling at a profit while market confidence began to recover.
This upward trend will continue until 2024, fueled by rising Bitcoin prices. It is important to note that, according to the cryptanalyst, there were no significant sell-offs by long-term holders, which strengthens the stability of the market as a whole.
SOPR as a forward market growth indicator
Overall, Cryptoavails noted that the current state of Bitcoin’s SOPR suggests healthy market dynamics, with long-term holders contributing to a stable price structure. Despite periodic corrections, the persistent presence of SOPR above 1 indicates that selling pressure remains under control.
The analyst also noted that this behavior reflects the maturity of the market, in which long-term investors are in no hurry to sell their assets, despite the rise in the price of Bitcoin.
Despite this, Bitcoin continues to decline consistently in price after plummeting below $100,000 last week. At the time of writing, Bitcoin is trading at $93,991, down 1.6% in the last 24 hours.
Featured image created with DALL-E, chart from TradingView