Bitcoin (BTC) long-term holders are profitable for the first time since May 2022, blockchain data shows

Blockchain data shows that long-term owners of Bitcoin (BTC) are profitable for the first time in almost a year. Historically, renewed profitability for long-term holders has predicted major market rallies.

According to data-tracking firm Glassnode, the seven-day moving average of the Bitcoin Long-Term Holders Return Rate (LTH-SOPR) crossed above 1 for the first time since May 2022.

The SOPR is the ratio of the US dollar value of the unspent transaction output (UTXO) at its creation to the value at which the wallet in question is issuing the UTXO onchain. UTXO is a transaction output that has not been used as an input in a new transaction. You can think of UTXOs as leftover change in your pocket.

When wallet X sends a bitcoin to wallet Y, the former is assumed to issue or sell coins to the latter. If the value at which X moved coins to Y was higher than when they were acquired, X realized a profit. A SOPR ratio above 1 indicates that moving coins are sold at a profit on average.

The long-term holder SOPR focuses on coins moved on-chain with a lifespan of at least 155 days.

“The SOPR variant with long-term holders tends to better reflect changes in the macro market. After a prolonged period of realized losses (LTH-SOPR < 1), the LTH cohort is finally transitioning back into a regime of profitable spending, a structure once again similar to past cycle transition points," said Glassnode analyst James Check in the latest edition of the weekly note.

The ratio’s recent move above one comes amid Bitcoin’s recovery from the bear market lows. At the current price of $29,500, the cryptocurrency is up 90% from the low of $15,460 recorded in November last year.

The previous crossovers of the ratio above one—May 2020, May 2019, and November 2015—also coincided with recovery rallies that eventually translated into multi-year bull runs.

The chart shows that extreme Sub-1s were historically marked periods of investor capitulation that coincided with market bottoms. Values ​​have now signaled over 10 market highs.

SOPR above 1 to create resistance

While the ratio’s transition above zero might indicate an upcoming positive market cycle, it could slow the cryptocurrency’s rise in the short-term.

“The LTH cohort currently consists of many 2021-22 cycle holders, many of whom remain submerged and likely to resist throughout the market rally,” noted Check.

South Korea-based analytics firm CryptoQuant expressed a similar sentiment, saying a return to profitability could put selling pressure on the market.

“From an on-chain data perspective, Bitcoin’s price could be pushed lower by higher spending from whales [large investors] and long-term holders are taking profits at the highest margin in almost a year,” CryptoQuant said in a report provided to CoinDesk.

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers