BTC’s rally above $70k has pushed the value of a key metric above 1, signaling that the coin’s short-term holders are sitting on profit.
- Bitcoin’s short-term holders now hold their coins at a profit. BTC’s future open interest has risen to a two-month high.
Bitcoin’s [BTC] Spent Output Profit Ratio (SOPR) for its short-term holders (STH) has rallied above 1, signaling that this cohort of investors now holds their coins at a profit.
In a new report, pseudonymous CryptoQuant analyst Phi Deltalytics found that the uptick in this metric’s value above 1 suggests the presence of “bullish sentiment in the market.”
BTC’s STH-SOPR measures whether investors who have held the coin for three to six months are selling at a profit or a loss.
When it returns a value above 1 such as this, it indicates that short-term holders, on average, are selling their coins at a profit. Conversely, if the STH-SOPR is below 1, it suggests that these holders are selling at a loss.
Why the value above 1 is significant
According to CryptoQuant’s data, BTC’s STH-SOPR was 1.019 at press time.
Source: CryptoQuant
Before this metric steadied at this point, it had cratered to the 1 level but did not drop below it, Deltalytics found.
According to him, when that happened, the coin traded at a price at which sellers were neither making nor losing money. This led many market participants to hold on to their coins instead of selling them. This was a positive sign for the market, signaling low selling pressure.
The analyst added that BTC’s STH-SOPR must stay above 1. If this happens, the market will “absorb” any profit-taking by sellers without the risk of a significant price drop.
Predicting that this might aid the sustainability of the BTC’s current price rally, Deltalytics added:
“With the market not overly heated, this dynamic has the potential to push Bitcoin’s price upwards.”
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BTC amid the recent price rally
The leading coin has benefitted from the market rally in the past 24 hours. At press time, BTC was trading at $71,212, and its price had grown 6% during that period.
The period under review has been marked by a significant uptick in trading activity in BTC’s derivatives market. According to Coinglass’ data, BTC’s derivatives volume has risen 112% in the past 24 hours.
At $35 billion at the time of writing, BTC’s futures open interest sat at its highest level since March.
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