Bitcoin SOPR Ratio Indicates Early Signs of Capitulation, But Not the Final Bottom Yet

Recent on-chain data reveals that the Bitcoin SOPR Ratio has dipped below 1, signaling potential early capitulation among investors. However, this decline isn't at a level that typically corresponds to historical price bottoms.

Key Takeaways

The Bitcoin SOPR Ratio has been below 1 for 29 days, indicating losses for investors.
This ratio, derived from the Spent Output Profit Ratio (SOPR), helps assess whether Bitcoin holders are selling at a profit or loss.
The current SOPR Ratio stands at 0.89, highlighting a trend where long-term holders are realizing fewer profits compared to short-term holders.
Historically, significant price bottoms for Bitcoin occur when the SOPR Ratio falls to 0.50 or lower.
Bitcoin's price is currently around $68,800, reflecting a 2% increase in the last 24 hours.

Bitcoin

Understanding the Bitcoin LTH/STH SOPR Ratio

As discussed by the analyst IT Tech on X, the Bitcoin SOPR Ratio has remained in the loss zone for nearly a month. The SOPR Ratio is an essential metric that reveals whether Bitcoin investors are selling their coins at a profit or a loss. Specifically, when the SOPR value is above 1, it indicates that the average holder is making a profit from their sales. Conversely, a value below 1 signifies that more investors are taking losses.

The SOPR Ratio compares the Spent Output Profit Ratio of short-term holders (STHs) with that of long-term holders (LTHs). The division between these two groups happens at 155 days—those holding Bitcoin for less than this duration are considered short-term holders, while those holding longer are classified as long-term holders. The actual calculation places the SOPR of LTHs in the numerator and that of STHs in the denominator. A ratio above 1 indicates that long-term holders are realizing more profit compared to short-term holders.

Here’s a chart from the analyst that illustrates the Bitcoin SOPR Ratio trends, along with its 90-day simple moving average (SMA):

Bitcoin LTH/STH Ratio

The graph above shows that the Bitcoin SOPR Ratio was previously above the 1 mark. However, following a recent market downturn, it has dropped to 0.89. This decline suggests that the steadfast holders in the market are now experiencing fewer profits or higher losses compared to newer investors. Historically, moments when the SOPR Ratio dips below 1 are often followed by significant price bottoms. Yet, as highlighted by IT Tech, true bottoms usually occur when the metric hits 0.50 or lower. Therefore, according to the SOPR Ratio, it might be premature to declare that Bitcoin has hit the bottom.

Current BTC Price Analysis

Currently, Bitcoin is trading at approximately $68,800, marking a rise of over 2% in the past day.

Bitcoin Price Chart

This recent price trend showcases the fluctuations Bitcoin has experienced over the last five days.