Recently, certain blockchain indicators changed, indicating that selling units of bitcoin held for a certain minimum time frame would be profitable.
at the beginning of the day, CoinDesk reported Citing data from Glassnode, they claim that the 7-day average of long-term holders’ return on expenditure (LTH-SOPR) has crossed a value of 1 for the first time since last May.
SOPR looks at the bitcoin denominations moved on-chain and measures how profitable it is to sell the digital currency. Glassnode Academy.
If the value of this indicator exceeds 1, it means that the sale of said unit will generate a profit, if it is less than 1, it means that such a transaction will generate a loss.
In addition to measuring profitability, this particular indicator can also give market observers insight into sentiment. Glassnode Academy.
LTH-SOPR specifically zooms in on units of this digital currency that have been in existence for at least 155 days, as specified in the CoinDesk article.
This article, written by Omkar Godbole, shows that digital currencies enjoy a bull market when the LTH-SOPR moves from below 1 to above 1 in November 2015, May 2019 and May 2020. said it happened before. Lasted several years.
When analysts were asked for their opinion on LTH-SOPR and its implications for this article, we received mixed responses.
“It’s just another way to measure sentiment,” said Joe Di Pasquale, CEO of crypto hedge fund manager. bitbull capitalwrote in an emailed comment.
“If the SOPR is above 1, it means that the coins moved during that period were profitable,” he noted. “An SOPR below 1 means that those who suffered losses were forced to sell.”
“A return to above 1 means that long-term holders are finally starting to turn a profit, so it could also indicate a change in sentiment for these companies to reduce selling pressure and start buying more. I have.”
“But I wouldn’t say the metric predicts an uptick. It usually reveals data points that are consistent with a shift in sentiment.”
Tim Eneking, Managing Director Digital capital managementexplained that the valuation provided by Godbole via email comments was “accurate,” but stated that “LTH-SOPR is not what drives BTC and crypto markets in general. On the downside, the LTH-SOPR is an indicator of the cause, not the cause itself.”
“There are four factors driving LTH-SOPR to rise and BTC and cryptocurrency prices to rise: peak interest rates (almost certainly next week), pending BTC halving, mid-November FTX “forced” Surrender and cryptocurrency bottoms, and much more. It’s more important than any Fiat stock breakdown and BTC correlation,” he said.
“Without the end, cryptocurrencies would have languished like the S&P, which has barely moved this year.”
When asked about the impact of these variables on Bitcoin, DiPasquale agreed, stating:
“Yes, these are the common reasons markets are trending up.
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and Sol.
