Bitcoin Short-Term Holders Take Profits, Will BTC Correct?

On-chain data shows Bitcoin short-term holder profits have increased, will this lead to a correction in the price of the crypto?

Bitcoin short-term holder SOPR has increased recently.

As one analyst at CryptoQuant pointed out. PostExamples of the current trend have led to a decline in the price of crypto in the past. The relevant clue here is “Expenditure output profit ratio” (SOPR), which tells us whether the average Bitcoin investor is currently selling their coins at a profit or at a loss.

When this metric has a value greater than 1, it means that overall holders are currently making some profit on their sales. On the other hand, values ​​below the threshold indicate that the overall market is currently leaning towards loss recovery. Naturally, an indicator exactly equal to 1 means that the average holder is just breaking even on its distribution.

One of the two main segments of the BTC market”Short term holders(STHs), which is a group that includes all investors who acquired their coins within the last 155 days. Holders who are sitting on their coins for more than this amount are called “Long-Term Holders” (LTHs).

Now, here is a chart that shows the trend in Bitcoin SOPR specifically for STHs:

Bitcoin Short Term Holder SOPR

The value of the metric seems to have risen in recent days | Source: CryptoQuant

As shown in the graph above, the Bitcoin STHSOPR (as well as its 7-day moving average) recently rose above 1 and broke. This means that as BTC has rallied, STHs have taken profits and are now selling to capture those gains.

The chart also includes data on the 7-day Triple Exponential Average (TRIX) of STH SOPR. TRIX is a momentum oscillator that displays the percentage change in the moving average of a metric after it has been smoothed three times exponentially (hence the name).

From the chart, it can be seen that during this bear market, whenever the STH SOPR 7-day TRIX has reached positive levels, the price of Bitcoin has also seen a rise locally and subsequently moved lower.

Recently, STH SOPR’s 7-day TRIX seems to have resumed, and the metric now seems to be turning inward, possibly leading to a top formation.

This pattern looks similar to examples seen earlier in bear markets, which could suggest that this Bitcoin rally could be similar to those previous ones. Although this will only happen if the pattern is complete and the indicators form the top.

The analyst has also posted a 2018-2019 bear market chart, to see how the current rally compares to the April 2019 rally.

Bitcoin 2018-2019 Bear Market

The trend in the STH SOPR 7-day TRIX in the 2018-2019 bear market | Source: CryptoQuant

Interestingly, the April 2019 rally experienced only a short-term pullback from the first major spike in the indicator. It was only with the second spike that the price topped out. have been. Some similarities Already between the current rally and April 2019, which could mean that the current one could also stop this first increase in the indicator and continue its momentum like the rally of the past.

BTC price

At the time of writing, Bitcoin is trading near $22,900, up 5% over the past week.

Bitcoin price chart

BTC consolidates | Source: BTCUSD on TradingView

Featured image from Thought Catalog on Unsplash.com, Charts from TradingView.com, CryptoQuant.com

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