Bitcoin Profit Metric Approaches Two-Year Lows: Insights into BTC Trends

Bitcoin profit metric eyes 2-year lows in 'complete reset:' BTC analysis

Summary:
Recent analysis indicates that Bitcoin long-term holders have adjusted their selling strategies as the value of BTC falls below $90,000. A derivative of the commonly used SOPR metric has hit its lowest point since early 2024, showcasing a shift in market dynamics primarily driven by short-term holders making impulsive decisions amidst recent price changes.

Key Takeaways:

Long-term Bitcoin holders have significantly altered their selling behavior as BTC drops below $90,000.
A variant of the SOPR metric indicates low profitability levels not seen in two years.
Short-term holders are making erratic trading decisions in response to recent price fluctuations.

Bitcoin SOPR Ratio Reaches a Crucial 1.35 Level

In a recent article on its blog, the on-chain analytics platform CryptoQuant highlighted that a significant Bitcoin holding metric is nearing two-year lows. Long-term holders (LTHs) have essentially ceased selling their BTC after the price of BTC/USD declined to levels unseen since April.

CryptoQuant reports a substantial shift in the profitability of unspent transaction outputs (UTXOs) created by long-term holders compared to their speculative counterparts, known as short-term holders (STHs). The designations “LTH” and “STH” refer to wallets holding BTC for longer or shorter than 155 days, respectively.

By employing an adjusted version of the Spent Output Profit Ratio (SOPR) metric—which assesses the share of UTXOs that are currently profitable or at a loss—CryptoQuant confirms that short-term holders now account for most profitable transactions.

“The Bitcoin SOPR Ratio (LTH-SOPR divided by STH-SOPR) has fallen to 1.35, marking its lowest point since early 2024. This drop has coincided with Bitcoin’s recent price correction to approximately $89,700,” summarized CryptoOnchain.

Bitcoin LTH-SOPR/STH-SOPR (14-period simple moving average). Source: CryptoQuant

From the SOPR data, CryptoOnchain drew two essential conclusions: a significant end to aggressive selling by long-term holders and the onset of a “market cool-down.” The decrease in the SOPR suggests that a substantial market “reset” is occurring.

Speculators Exhibit Confusion Over BTC Price Movements

Bitcoin speculators have shown erratic behavior in reacting to recent BTC price movements, as indicated by their overall exposure levels.

The net position change among short-term holders on a rolling 30-day basis experienced a notable increase on November 24, as reported by CryptoQuant. However, this upward trend quickly reversed to a negative position by December 1, coinciding with another dip in BTC/USD prices around the monthly opening in December.

Bitcoin STH 30-day rolling net position change. Source: CryptoQuant