Over the past day, Bitcoin price has been trending sideways with no clear intention to break out. This is typical weekend price action, but there was an interesting update to the underlying dynamics that keeps the flagship cryptocurrency hovering around $70,000.
Bitcoin LTH-SOPR Falls to 1.01 – What This Means
In a recent post on CryptoQuant’s QuickTake, on-chain analyst GugaOnChain revealed that a battle between various groups of Bitcoin investors is currently underway.
GugaOnChain cites the Long-Term Holder SOPR (Spend Output Profit Ratio) metric, which tracks whether long-term investors (who have held Bitcoin for at least 155 days) are selling their tokens profitably or at a loss. A number above 1 suggests these investors are accumulating profits, while a number below 1 suggests they are not.
According to GugaOnChain, the current LTH-SOPR is 1.01, reflecting long-term investors in Bitcoin exiting the market with breakeven or minimal profits. The analyst explains that this means “veterans are once again aggressively defending their $70,675 acquisition fee.”
At the same time, the Puell Multiple reflects a reading of 0.60, which GugaOnChain describes as a typical sign that the market is undervalued and Bitcoin miners are starting to experience fatigue. Typically, when the Puell Multiple drops to 0.5, it means miners are capitulating.
It is worth noting that if the Puell multiple should continue its approach towards 0.5, the Bitcoin price could follow a bearish move until the realized price of $54,000 is retested.
Institutional demand buffers whale distribution
In particular, GugaOnChain explains that the most important developments still depend heavily on the dynamics between whale populations. As of March 13, there was a large distribution of approximately 16,100 BTC among whales holding between 1,000 and 10,000 BTC. Normally, such a large sell-off would trigger a sharp decline in the price of Bitcoin, but the price only retraced about 0.33%. GugaOnChain points out that this is due to the absorption of supply by different groups of whales and even institutional investors.
In particular, both ‘large whales’ and ‘dolphins’ (holding 100 to 1,000 BTC), which store more than 10,000 BTC, refuted that it should have been a huge price drop. At the same time, the demands of the institution did not rest for a week. Spot ETFs saw total net inflows of $763.4 million during the period, with $180.4 million coming on March 13 alone.
Puell Multiple reflects the possibility of visiting $54,000, while GugaOnChain claims that ‘Smart Money currently validates $70,000 as the “inflection point”’. As such, if LTH-SOPR continues to dominate above 1.0, it will reflect that the current Bitcoin price has been successfully defended. Interestingly, the ETF’s conviction capital is already positioned for the next big move. At the time of writing, Bitcoin is trading at $71,000, reflecting a 0.5% gain in 24 hours.
Featured image from Flickr, chart from Tradingview
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