• BTC’s Long-term Spent Output Profit Ratio (LTH SOPR) metric has grown due to the YTD rally in Bitcoin’s price.
• When the LTH SOPR is below 1, it suggests that long-term holders are losing money and may be motivated to sell.
• Analysts suggest that traders and investors should closely monitor the SOPR metric to anticipate potential price direction and market sentiment.
Understanding Long-Term Holder’s Performance: BTC’s LTH SOPR
The Long-term Spent Output Profit Ratio (LTH SOPR) is a metric used to understand the overall market sentiment, analyze profitability and losses incurred during a specific period for a particular crypto asset. It tracks the amount of profit realized for all on-chain coin transactions.
Implications of BTC’s LTH SOPR
When the LTH SOPR is below one, it suggests that long-term holders are facing losses and could be motivated to sell their cryptocurrency holdings. Conversely, when the metric is above one, long-term holders are realizing profits and may hold or accumulate more coins.
BTC’s Bearishness Impacting Mining Activity
The bearishness that plagued 2022 trading year resulted in significant losses for market participants, including long-term investors per the LTH SOPR. According to an analyst from CryptoQuant, this had caused its metric to trend below one since late May 2022. With the general uptrend in the crypto market since this year began however, „the metric started recovering and slightly increased due to the uptrend in Bitcoin’s price.“
Monitoring The Metric To Anticipate Potential Price Direction & Market Sentiment
Crypto analysts suggest traders and investors should closely monitor Bitcoin’s LTH SOPR metric in order to anticipate potential price direction and market sentiment accurately. This way they can assess if there is any indication of bearishness or bullishness within the market which will affect their trading decisions accordingly.
Mining Activity Showing Correlation With BTC Price
Mining activity on BTC network is significantly impacted by its king coin price as miners require an ongoing cost such as electricity running costs which ties their behaviors with Bitcoin’s price movements directly. Therefore metrics such as Puell Multiple can be studied regularly as they compare estimated 365 day average mining costs with current prices of BTC so traders can have a better idea about miners‘ activities affected by changing prices over time .