Bitcoin has regained price levels above $90,000 after trading below this major zone for much of the past two weeks. Within this period, the leading cryptocurrency fell to $80,600, deviating more than 10% from the aforementioned support.
It looks like a recovery is underway as prices are well above $90,000. However, close monitoring of on-chain activity reveals that the reality is the opposite of what was widely expected.
LTH-STH SOPR ratio jumps to 2.63 — what this means
In a recent QuickTake post on CryptoQuant, on-chain analytics platform Arab Chain reveals changes in the inner workings of the Bitcoin market. This report revolves around measurements taken from the Binance: BTC SOPR Ratio (LTH – STH) indicator, which evaluates the profit-taking behavior of long-term Bitcoin holders (LTH) compared to that of short-term holders (STH).
Arab Chain highlighted that the LTH-STH ratio recently surged to 2.63, which is the highest level since August. Notably, this spike in the SOPR index occurred as Bitcoin rose to around $90,000, indicating that despite this modest pullback, the decline in LTH is fundamentally steeper.
This notion is also supported by the long-term holder SOPR itself, which is reportedly 2.58, indicating that members of Bitcoin's most influential trendsetters are now exiting the market with huge profits. Typically, sudden changes in the LTH-STH ratio, especially those that cause the establishment of multi-month highs, typically represent a period of selling pressure prior to a price correction. However, the current situation deviates somewhat from this standard.
“The profit-taking phase could last several weeks.” — Analyst
While the LTH SOPR is 2.58, the STH SOPR is around 0.98, suggesting that short-term holders of this leading cryptocurrency are either breaking even or selling their holdings at some loss.
Therefore, the imbalance in the market manifests itself in the form of long-term investors reaping significant profits and selling to take advantage of previous gains, while short-term investors receive no clear profits. Arab Chain explains that if the decline in Bitcoin prices becomes more severe, the decline could accelerate further.
Historically, the widening of the gap between LTH and STH SOPR has often preceded clear moves in BTC's market cycle. Arab Chain said the move suggests the market may be entering a typical “cash for profit” phase, where major holders sell their holdings. The company speculates that the market could see a significant price reset, as opposed to the modest price fluctuations that investors are expecting, since the last similar-sized spike occurred in August.
As of this writing, Bitcoin's value is around $90,652, with no major movements recorded over the past day.
Featured images from Shutterstock, charts from Tradingview
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