Bitcoin SOPR Ratio Shows Early Capitulation—But Not Full Bottom Yet

On-chain data shows the Bitcoin SOPR Ratio has declined below 1 recently, but it’s not yet at a level corresponding to historical bottoms.

Bitcoin LTH/STH SOPR Ratio Is Down To 0.89

As explained by CryptoQuant author IT Tech in an X post, the Bitcoin SOPR Ratio has been in the loss territory for 29 consecutive days now. The SOPR Ratio is an indicator based on another metric known as the Spent Output Profit Ratio (SOPR).

The SOPR basically tells us about whether the BTC investors are transferring their coins at a profit or loss right now. When the value of this metric is greater than 1, it means the average holder is transferring their tokens at a net profit. On the other hand, the indicator being under the threshold suggests the dominance of loss-taking.

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Now, the SOPR Ratio, the actual metric of interest here, takes the SOPR of two investor cohorts and finds the ratio between them. The groups in question are the short-term holders (STHs) and long-term holders (LTHs), the two main divisions of the BTC market done on the basis of holding time.

The cutoff between the cohorts is 155 days, with investors holding coins younger than this threshold belonging to the STHs, while those with tokens more aged than it falling in the LTHs.

The SOPR Ratio puts the SOPR of the LTHs in the numerator and that of the STHs in the denominator. As such, the metric being above 1 implies LTHs are participating in a higher amount of profit-taking relative to the STHs.

Now, here is the chart shared by the analyst that shows the trend in the Bitcoin SOPR Ratio, as well as its 90-day simple moving average (SMA), over the history of the cryptocurrency:

Looks like the value of the metric has gone down in recent days | Source: @IT_Tech_PL on X

As is visible in the above graph, the Bitcoin SOPR Ratio was above the 1 mark earlier, but after the recent market drawdown, the indicator has slipped to a value of 0.89. The transition into the region below 1 implies the diamond hands of the market are now realizing fewer profits/higher losses as compared to the new entrants.

Historically, the zone below 1 has been where the cryptocurrency’s price has tended to find major bottoms. As IT Tech has highlighted in the chart, however, the bottoms have usually only occurred when the metric has gone down to a value of 0.50 or lower.

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As such, at least from the perspective of the SOPR Ratio, it may be too early for a Bitcoin bottom. It now remains to be seen how the indicator will develop in the coming days and whether its value will continue to decline.

BTC Price

At the time of writing, Bitcoin is trading around $68,800, up more than 2% over the last 24 hours.

The trend in the price of the coin over the last five days | Source: BTCUSDT on TradingView