Bitcoin STH SOPR Metric Nears Upper Threshold — Are Short-Term Holders About To Take Profits?

Following the slight pullback in Bitcoin’s price from the $115,000 level, several on-chain metrics are beginning to flash warning signals, and a possible shift in the current market trend. One of these crucial metrics is the Bitcoin Short-Term Holders SOPR.

Rising Bitcoin STH SOPR Signals Warning

Amid fluctuating market action, Bitcoin Short-Term Holders’ Spent Output Profit Ratio (SOPR) is showing that these investors are approaching a crucial point. In a recent quick-take post on the CryptoQuant platform, Yonsei Dent, a market expert, outlined that the key metric is drawing close to the upper band.

BTC STH-SOPR indicator shows the on-chain breakeven threshold for short-term holders. It is worth noting that when the value is more than 1.0, it indicates that these investors are generally making profits. On the other hand, when the metric drops below the 1.0 level, it suggests that the investors are realizing losses.

Given that the Bitcoin short-term holder SOPR hints at the aggregated action of a large number of market players, the metric also has a strong statistical aspect. About 95% of all data points are typically captured by the ±2 standard deviation range. Therefore, a move above that range takes place less than 5% of the time, which makes this trend an uncommon event.

Using a combination of the Bollinger Band setup and the short-term holder SOPR, Yonsei Dent highlighted that a steady move to +2σ usually signals resistance or profit-taking zones. Meanwhile, when it is approaching -2σ, it often suggests support or accumulation opportunities.

However, the STH SOPR currently still has some room before reaching the +2σ upper band. While the metric moves closer to the upper band, Dent has underlined the importance of monitoring the indicator to confirm whether momentum has begun to turn or if short-term overheating is gradually appearing.

BTC Has Not Yet Reached Its Top

Despite the potential profit-taking from short-term holders, Joao Wedson, the founder of Alphractal, claims Bitcoin is yet to reach its top for this cycle due to past cycles’ trend. Unlike past cycles, few investors were observed buying the top out of euphoria during a similar period.

In previous ATHs, Bitcoin would spike with pure enthusiasm and then plummet just as quickly, barely having time to breathe above new highs. As a result, thousands of investors were stuck at the top, where their profits turned into losses within days. However, recent trends show that this cycle could be charting a different course.

After reclaiming the $100,000 landmark, BTC appears to have spent almost 1 year holding above this critical area. During the period, the flagship asset has been consolidating and steadily testing a range that would likely be a pure mania in past cycles. 

In a shocking twist, Wedson highlighted that the real euphoria has not yet kicked off. At this point, the expert is uncertain whether it will happen this cycle or the true top is still ahead, noting that euphoria came before consolidation in previous cycles. However, it appears that euphoria was preceded by consolidation, which changes everything this time.