Long-term Bitcoin holders profit for first time in 11 months

According to blockchain data, long-term Bitcoin holders have made their first profit in almost a year. Historically, a return to profitability for long-term holders has tended to herald a sharp market rally.

According to data tracking firm Glassnode, the seven-day average of Bitcoin’s “long-term holder yield return” (LTH-SOPR) surpassed 1 for the first time since May 2022.

SOPR is the ratio of the dollar value of an unspent transaction output (UTXO) at the time of generation to the value of the associated wallet spending the UTXO on-chain. UTXOs are transaction outputs that have not yet been used as inputs in new transactions. You can think of UTXO as change in your pocket.

If wallet X sends 1 BTC to wallet Y, assume wallet X is spending or selling to wallet Y. X is said to be profitable if its value converted to Y is higher than when it was purchased. A SOPR ratio above 1 indicates that, on average, moving coins are being sold for a profit.

LTH-SOPR focuses on tokens that move on-chain and have a lifespan of at least 155 days.

“Changes in LTH-SOPR tend to better reflect changes in the macro market. After a long period of real losses (LTH-SOPR < 1), LTH pools are finally returning to profitable payouts,” Glassnode analyst James Check said in a weekly report pattern - a similar structure occurs again.

bitcoin

stupidnoise: glass node

The latest move for the ratio to rise above 1 comes as BTC recovers from the depths of a bear market. At its current price of $29,028, the leading cryptocurrency is up nearly 90 percent from a low of $15,460 hit last November.

Previous times the ratio was above 1, such as May 2020, May 2019 and November 2015, also coincided with rallies that eventually turned into multi-year bull markets.

The chart shows the index falling below 1, marking a historic period of capitulation, which coincided with a market bottom. Meanwhile, a value above 1 indicates that the market has peaked.

SOPR greater than 1 interference

While a cross ratio above 1 could signal positive market cycles ahead, in the short term it slows the cryptocurrency’s momentum.

Check Notes:

“The current LTH pool is made up of many holders from the 2021-2022 cycle, many of whom are still losing money and may be held back during market rallies.”

CryptoQuant, a South Korea-based analytics firm, took a similar view, saying profit returns would put selling pressure on the market.

“From an on-chain data standpoint, bitcoin prices could come under pressure as whales (big investors) spend more and long-term holders take profits at near one-year highs.”

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According to Coindesk


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