Bitcoin has continued to see declining performance in recent days, with on-chain metrics providing valuable insights into market behavior.
Of these metrics, the Spent Output Profit Ratio (SOPR) has emerged as a crucial tool for assessing investor sentiment and market resilience for long-term investors.
Long-term holders, defined as investors who hold Bitcoin for more than 155 days, are often seen as a stabilizing force in the market. Their selling patterns can significantly influence price trends, making SOPR an indicator worth watching.
Long-term trends and market sentiment for holders
Recently analysis from a CryptoQuant analyst known as Cryptoavails highlights that Bitcoin’s long-term SOPR metric continues to show notable patterns as Bitcoin price trends rise.
Historically, SOPR values above 1 indicate that long-term holders are selling at a profit, while values below 1 suggest they are selling their holdings at a loss.
This behavior reflects broader market confidence or capitulation during periods of price decline. Currently, the SOPR metric remains consistently above 1, indicating that long-term holders are selling profitably without putting significant downward pressure on Bitcoin’s price.
Cryptoavails’ analysis tracks the key phases in the Bitcoin market over the past two years, highlighting significant shifts in SOPR values. For example, in early 2022, the SOPR metric showed high volatility with frequent spikes, indicating intense profit-taking by long-term holders.
Amid these sales, Bitcoin’s price was on a downward trend, reflecting continued selling pressure during that period. This trend gradually changed in late 2022 and early 2023, when the SOPR measure remained largely below 1, indicating that long-term holders were selling at a loss as the market sought stability.
In mid-2023, the SOPR began to trend upward, signaling renewed confidence among long-term investors. The measure consistently moved closer to or above the critical level of 1, indicating that long-term holders were once again selling at a profit as market confidence began to recover.
This upward trend has remained intact until 2024, supported by Bitcoin’s rising price levels. Importantly, there has been no significant sell-off by long-term holders, which the crypto analyst believes reinforces the stability of the broader market.
SOPR as a forward indicator of market growth
Overall, Cryptoavails said the current state of Bitcoin’s SOPR indicates healthy market dynamics, with long-term holders contributing to a stable price structure. Despite periodic corrections, the continued presence of the SOPR above 1 indicates that selling pressure remains under control.
The analyst also pointed out that this behavior reflects the maturity of the market, where long-term investors are not rushing to offload their holdings despite Bitcoin’s price rise.
Regardless, Bitcoin has continued to fall consistently in price since its sharp drop below $100,000 last week. At the time of writing, Bitcoin is trading at a price of $93,991, down 1.6% in the past 24 hours.
Featured image created with DALL-E, Chart from TradingView
