Bitcoin has regained price levels above $90,000 after trading in this key area for the past two weeks. During this period, the top cryptocurrency fell to $80,600, more than 10% away from the aforementioned support.
As the price significantly exceeds $90,000, it appears that recovery is underway. However, close monitoring of on-chain activity shows that the reality is the exact opposite of widespread expectations.
LTH-STH SOPR Ratio Spikes to 2.63 – What This Means
In a recent post on CryptoQuant’s QuickTake, on-chain analytics platform Arab Chain reveals changes within the internal structure of the Bitcoin market. The report revolves around readings taken from the Binance:BTC SOPR Ratio (LTH – STH) indicator, which evaluates and compares the profit-taking behavior of long-term holders (LTH) and short-term holders (STH) of Bitcoin.
Arab Chain highlights that the LTH-STH ratio recently surged to 2.63, the highest level since August. Notably, this surge in the SOPR index comes as Bitcoin rises to around $90,000, and despite this modest bounce, it represents an underlying surge in LTH selling.
This notion is confirmed by the long-term SOPR itself, which is reportedly 2.58, indicating that members of Bitcoin’s most influential trend-setters are currently exiting the market with large profits. In general, rapid movements in the LTH-STH ratio, especially those that result in multi-month highs, typically indicate a period of sustained selling pressure prior to a price correction. However, the current situation deviates slightly from this norm.
‘Profit-taking phase could last for weeks’ — Analyst
With LTH SOPR showing at 2.58, STH SOPR is standing near a level of 0.98, indicating that short-term holders of the major cryptocurrency are selling their holdings to break even or incur some losses.
Market imbalances are thus revealed in the sense that “long-term investors make significant profits and sell to take advantage of previous gains, while short-term investors do not make clear profits.” Arab Chain explains that if the Bitcoin price decline deepens, there could be further acceleration to the south.
Historically, the widening gap between LTH and STH SOPR has often preceded movements defined in the BTC market cycle. According to Arab Chain, this action indicates that the market is likely to enter a classic “cash for profit” phase where major holders sell off their holdings. After seeing a surge of roughly the same size last August, the company speculates that the market could see a major price reset, as opposed to the minor price movements investors might expect.
As of this writing, Bitcoin’s value is around $90,652 and has not recorded any significant movement over the past day.
Featured image from Shutterstock, chart from Tradingview
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