As Bitcoin price drops to $40k, on-chain data shows that long-term holders have made some gains recently.
Bitcoin Long Term SOPR Headline Shows Some Spikes Recently
As one analyst noted in a CrypoQuant post, some long-term BTC holders appear to have engaged in profit-taking over the past day.
The relevant indicator here is the Spent Production Earnings Ratio (or SOPR for short), which tells us about the earnings ratio of the entire Bitcoin market.
The metric works by checking the past history of each coin that was sold on the chain to see what price it moved to before. If this previous price was lower than the current price, then the coin was moving with a profit.
Likewise, if the current price is higher, then the investor sold this coin at a loss. When the SOPR value is above one, it means that investors, on average, are selling at a profit right now.
Related Reading | Bitcoin Sentiment Hits a Local High, But Can’t Shake Recent Fear
On the other hand, when the value of the indicator is less than one, it implies that investors are selling at a loss in general at the moment. The SOPR value exactly equal to one naturally means that the market is breaking even at the moment.
One version of this Bitcoin indicator takes into account only those coins that have not moved for at least 155 days before being sold. This offering belongs to long-term holders, and the metric is called LTH SOPR.
The chart below shows the trend in the BTC LTH SOPR over the course of the month so far:
The value of the indicator seems to have spiked recently | Source: CryptoQuant
The quant has marked the especially large spikes of the Bitcoin LTH SOPR in the chart above. At those points, long-term holders appear to have reaped some gains.
Such a trend has often been bearish, as you can see from the chart that the price struggled after these big spikes.
Related Reading | Here are two scenarios for Bitcoin one month before the FED announces a potential interest rate hike
Therefore, it is not surprising that the price of the crypto crashed to $40,000 shortly after the last rise of the indicator.
BTC price
At the time of writing, the price of Bitcoin is hovering around $40,300, down 7% over the past seven days. Over the last month, the crypto has lost 5% in value.
Below is a chart showing the price trend of the coin over the last five days.
The price of BTC seems to have crashed in the last twenty-four hours | Source: BTCUSD on TradingView
Just a couple of days ago, the price of Bitcoin seemed to be closing in on another retest of $45k, but over the last day, the price fell hard to $40k instead.
Featured Image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com
This post Bitcoin Data Shows Long-Term Holders Profit Taking Behind Decline To $40k
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