Bitcoin Once Again Arrives At This Bear-Bull Boundary—Will A Break Happen?

On-chain data shows a Bitcoin indicator is currently retesting a level that has historically acted as a boundary line between bearish and bullish momentum.

In a new post on X, the on-chain analytics firm Glassnode has discussed about the latest trend in the BTC Spent Output Profit Ratio (SOPR) of the short-term holders.

The “SOPR” here refers to an on-chain indicator that tells us about whether the Bitcoin investors as a whole are selling or transferring their coins at a profit or loss.

When the value of this metric is greater than 1, it means the average holder of the asset is selling at a net profit. On the other hand, it being under this threshold suggests the overall market is realizing a net loss.

Naturally, the SOPR being exactly equal to the 1 level implies the profits being realized by the investors are canceling out the losses, so the average holder can be assumed to be just breaking-even on their transactions.

In the context of the current topic, the SOPR of only a specific investor group is of interest: the short-term holders (STHs). The STHs include the Bitcoin investors who purchased their tokens within the past 155 days.

Now, here is the chart shared by the analytics firm that shows the trend in the 7-day moving average (MA) of the Bitcoin STH SOPR over the last few months:

As is visible in the above graph, the Bitcoin STH SOPR fell under the 1 mark earlier in the year, implying the STHs took to loss-taking as the price of the cryptocurrency moved in a bearish trajectory.

Recently, though, the metric has been making recovery and it’s now back at the break-even level. “Historically, breaking above 1.0 confirms a shift in momentum, while failure to do so often leads to renewed sell pressure,” explains Glassnode.

Breaking above the level, however, is no simple task, for it serves as a major psychological level for the STHs. These investors are by definition the entities who are either new to the market or just not resolute enough to hold for long periods, so they can be prone to panic selloffs.

When the STH SOPR rises to the 1 mark, it means these investors, who were forced into loss selling earlier, are able to break-even again. Selling pressure can spike when this happens, as STHs rush to get their money ‘back.’

The last time that Bitcoin saw the indicator make a retest of this level was back in January. From the chart, it’s apparent that it successfully found a breakout then, although it was only short-lived.

It now remains to be seen whether the metric can surge into the profit zone this time as well or not.

Bitcoin has been slipping down during the past few days as its price has come down to the $94,500 level.