Are Bitcoin’s Short-Term Holders Signaling the Next Market Peak?

A quantitative analyst has shared insights into Bitcoin's potential for further price growth, suggesting that there may still be room for an upward trend, based on a key on-chain indicator tracking short-term holders' behavior.

The indicator in question, known as the Spent Output Profit Ratio (SOPR), measures whether Bitcoin investors are selling at a profit or a loss. The metric works by examining past transaction values to determine if a coin is being sold for more than it was originally purchased. If it is, the sale contributes to profit realization, while a sale below the initial purchase price leads to a loss.

The current analysis focuses on the SOPR of short-term holders (STHs), who are defined as Bitcoin investors holding their assets for less than 155 days. This group tends to be more reactive to market changes, often selling quickly during rallies or corrections.

Recent data shows that the STH SOPR has remained above the 1.0 threshold for several months, indicating that this group is, on the whole, realizing profits. A recent sharp uptick in the indicator coincided with Bitcoin’s price rally, suggesting that short-term holders are capitalizing on the price surge.

Historically, this type of profit-taking from short-term holders has often signaled market tops. However, the current SOPR level is still far from the zone typically associated with market euphoria, suggesting that Bitcoin may not yet be in danger of peaking. Despite this, the indicator remains within a range where local tops have previously occurred, such as during Bitcoin’s first-quarter high earlier this year.

It remains to be seen whether demand can continue to absorb the selling pressure from short-term holders or if this will lead to another price correction for Bitcoin.