A quant has explained how this bearish divergence in Bitcoin on-chain data can lead to a short-term correction in the price.
Bitcoin Short-Term Holder SOPR Has Been Slowing Down Despite Price Going Up
As explained by an analyst in a CryptoQuant post, a gap has been forming in the purchasing power of short-term holders and the BTC price. The relevant indicator here is the “Spent Output Profit Ratio” (SOPR), which tells us whether investors in the Bitcoin market are selling their coins at a profit or at a loss right now.
When the value of this metric is greater than 1, it means the overall market is realizing some amount of profit currently. On the other hand, values below the threshold suggest the average holder is seeing some loss at the moment. Naturally, the indicator at exactly equal to 1 implies the investors are just breaking-even on their investment.
The “short-term holder” (STH) group is a Bitcoin cohort that includes all investors who bought their coins less than 155 da
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