25 February, 2024

Investors Holding Bitcoins Experienced a Brief Loss Due To LTH-SORP Falling Below 1

3 months ago

10 Feb, 2024

  • Investors who have been holding Bitcoins for over 12 months experience pain because of a brief loss in their investments.
  • LTH-SOPR is an indicator used to measure the profit and loss over a particular time frame. 
  • Bitcoin LTH-SORP fell below 1 and reached 0.96 for a short period, and then went back above 1. 

In the recent twist of events in the crypto market, the Spent Output Profit Ratio (SOPR) of Bitcoin for its long-term holders (LTH) went below one, reaching 0.96. This indicates that investors holding Bitcoins for over 155 days will suffer a loss. Crypto Hell, a crypto analyst on CryptoQuant, asserted that there is a possibility for short-term traders to sell at a loss. 

LTH-SOPR is an indicator that signals the degree of realized profit and loss of long-term holders of a crypto asset. If the value of LTH-SOPR is above 1, it hints to long-term holders of BTC that they can sell coins at a profit. If the value falls below 1, it indicates that the long-term holders of BTC are selling coins at a loss. 

On November 30, 2023, the LTH-SOPR of Bitcoin fell to 0.96 for a brief period and then emerged back to above 1. After a brief decrease, it went to a height of 1.61, which means that the investors who have held BTC over 12 months were selling at a profit. 

In regards to BTC’s short-term holders, analyst Crypto Hell said that their SOPR is also dipping close to 1.    

In this consolidated price situation, tons of traders push themselves into spot or derivative markets. If their analysis goes wrong, it’s losses. That could drop the STH-SORP ratio, indicating short-term traders selling at a loss.

Crypto Hell asserted that the consistent decline in the SOPR of the two classes of investors typically results in a decline in BTC’s price. He said that by examining both ratios, it is evident that there is a willingness to sell at a loss, which suggests a potential correction toward the $33,000 mark.

On December 1, the price of BTC was over $38,000 for the first time since May 2022. The increase in price results in the liquidation of some short positions in the future market. With the current bullish trend of BTC due to various sentiments, Coinglass revealed that BTC’s open interest has climbed by 8%.