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After rising to $20.9k, Bitcoin has seen a slight decline towards the low $20k levels today due to profit taking by short term holders.
Bitcoin Short-Term Holder SOPR has increased in the past two days
As noted by an analyst in a CryptoQuant aftershort-term holders appear to be using the latest price increase for profit-taking.
The relevant indicator here is the “Spent output-earnings ratio(SOPR), which tells us whether the average investor is currently selling Bitcoin for a profit or loss.
When the value of this metric is greater than 1, it means that the overall market is currently making some gains. On the other hand, values below the threshold suggest that the holders as a whole are selling at a loss
Of course, SOPR values exactly equal to one suggest that investors are just breaking even on their sales right now.
Now there is a cohort in the Bitcoin market called the “short term holders” (STHs), which includes all investors who have held their coins less than 155 days ago.
Here is a chart showing the trend in the BTC SOPR specific to this holder group over the past few weeks:
The value of the metric seems to have spiked up in recent days | Source: CryptoQuant
As you can see in the chart above, the Bitcoin STH SOPR has risen above the 1 level for the past two days.
This increase coincided with BTC price finally moving up after moving sideways around $19k for a long time. This suggests that these investors are taking this opportunity to make some profit.
Such profit-taking is generally bearish for the price of the crypto, and as the chart shows, there have been three instances of this type of trend in the past two weeks. All those profit realizations of the STHs resulted in a price drop after a short-term gain.
Also this time, BTC price has fallen from its high of $20.9k to a low of less than $20.1k. before going back to the current level.
At the moment of writing, The price of Bitcoin hovering around $20.5k, up 8% over the past seven days. The crypto has increased in value by 7% in the past month.
Below is a chart showing the trend in the price of the coin over the past five days.
Looks like the value of the crypto has gone down over the last couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com