Bitcoin’s spent output profit ratio (SOPR) is calculated by dividing the SOPR of long-term holders (LTH-SOPR) by the SOPR of short-term holders (STH-SOPR). When elevated, it shows whether LTHs are realizing more profits than STHs, which can signal potential market tops.
The SOPR ratio saw a significant spike last week, reaching a two-month high of 3.55 on March 22. Such sharp increases often follow local market tops as LTHs take advantage of rising prices.
The following day, the SOPR ratio declined. While this could indicate reduced profit-taking from LTHs, it can also show a spike in STH activity. The spike in Bitcoin’s price seen on March 23 further confirms this.
The trend shows that LTHs took advantage of rising prices throughout the week, steadily increasing their selling activity before sharply accelerating. The decline in SOPR after the spike points to a cooling period, where LTHs may have paused aggressive selling, and STHs picked up the pace.
A continued decline in SOPR would suggest reduced activity from LTHs and an increase in selling pressure coming from short-term holders, while a sustained increase would signal further distribution by LTHs.
