A recent analysis indicates that Bitcoin’s long-term holders are gradually taking profits, which could influence prices in either direction depending on how the situation develops.
Long-Term Holder Average Monthly SOPR Drops Below 1
In a recent CryptoQuant QuickTake, on-chain analyst Darkfost notes that Bitcoin’s long-term holders are entering a delicate phase in the current market cycle. This observation is based on the Long-Term Holders SOPR metric, which measures whether coins moved by these holders are sold at a profit or a loss. A SOPR value above 1 indicates average profit-taking, while a value below 1 suggests sales are occurring at a loss.
Darkfost points out that the metric has recently fallen below the key level of 1, currently hovering around 0.98. This signals that long-term holders, typically the most resilient investors, are starting to realize losses on a monthly basis. However, the picture looks different on an annual scale.
Annual LTH SOPR Remains Positive, But Trend Is Declining
While the monthly SOPR is in negative territory, the annualized figure remains positive at approximately 1.84, implying average realized gains of about 84%. Nevertheless, these annual profits have been on a downward trend.
Notably, the LTH SOPR has not exceeded 3.4 in the current cycle—roughly half the peak reading of the previous cycle and less than a quarter of the peak from two cycles ago. This suggests a more measured pace of profit-taking among long-term holders compared to past cycles.
Darkfost also references historical data, noting that bear markets have typically only formed after the SOPR fell to around 0.6, which corresponds to average realized losses of about 40%. Although the current monthly reading is below 1, it remains far from this capitulation zone.
For now, long-term holders appear to be in a transitional phase. If their realized profits continue to decline, selling pressure from this group could gradually ease.
As of this writing, Bitcoin is trading around $64,247, down 4.85% over the past 24 hours.
Frequently Asked Questions
FAQs Bitcoins Delicate Phase LongTerm Holder Behavior
BeginnerLevel Questions
1 What does it mean that Bitcoin is entering a delicate phase
It means the market is at a potential turning point Prices arent surging like in a bull market but they also havent crashed Its a period of uncertainty where the next major price move could be decided by the actions of large investors
2 Who are longterm holders
These are investors who buy Bitcoin and hold it for a long time instead of trading it frequently They are typically seen as having strong conviction in Bitcoins longterm value
3 What does taking significantly lower profits mean
It means that when these longterm holders sell some of their Bitcoin they are locking in much smaller profits compared to the huge gains they could have taken during the peak of the last major bull market Theyre being more cautious
4 Is this a bad sign for Bitcoins price
Not necessarily It can be interpreted two ways it might signal a lack of confidence in a nearterm price surge OR it could mean holders are being patient waiting for even higher prices before they sell in large amounts which can reduce selling pressure
5 Should I be worried about investing in Bitcoin right now
This phase highlights increased risk and volatility Its not a time for speculative shortterm bets It reinforces the standard advice only invest what you can afford to lose consider dollarcost averaging and focus on a longterm strategy if you believe in the asset
Advanced Practical Questions
6 Why are longterm holders taking lower profits now
Several reasons are possible they may need to cover expenses after a long hold they might be rebalancing their portfolio or they could believe the market needs to consolidate before the next major upward move so theyre taking some gains off the table cautiously
7 How does this behavior affect the overall market
When longterm holders sell less aggressively it reduces the available supply of Bitcoin for sale on the market This can help put a floor under the price However if they start selling more heavily it could signal a top or lead to increased downward pressure