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Bitcoin finds itself in a peculiar balance. On one hand, long-term holders consistently capitalize on gains, converting years-old coins into profits whenever possible.
Conversely, short-term holders are barely managing to break even, showing little conviction in either taking profits or realizing losses. This dual-paced market characterizes the current landscape and helps clarify why rallies feel heavy and pullbacks seldom lead to capitulation.
On September 18, Bitcoin prices surged past $117,120, spurred by volatility from the Federal Reserve’s recent interest rate cut. Despite the preceding volatility that led to the breakout above $115,000, Bitcoin’s price has risen modestly over the last month and is nearly 24% higher year-to-date. Beneath this seemingly calm surface lies a more complex story.
The long-term holder SOPR, which gauges whether coins older than 155 days are being spent at a profit or loss, currently stands at 1.78. This figure is significantly above its historical median, suggesting that older coins are entering the market with consistent gains.
In contrast, the short-term holder SOPR, which measures the profitability of newer coins, remains stagnant at 1.00. This indicates a break-even situation: coins sold by short-term holders are fetching approximately the same prices at which they were acquired.
This divide between long-term and short-term holders creates an imbalance in rally dynamics. When long-term holders sell at a profit, they add a steady supply that the market must absorb. If short-term participants also sell profitably, the market can accommodate this, as these instances typically align with expanding trends when demand is strong and buyers are active. However, when short-term holders linger around break-even, demand tightens, while long-term distributions continue to pressure the market.
Data from the last two months clearly illustrates this imbalance. Over the past 60 days, long-term holders have realized profits on 33 separate days, compared to just 16 profitable days for short-term holders. Notably, there were 17 days where long-term holders sold at a profit while short-term holders sold at a loss. This scenario epitomizes a two-speed market: one group confidently unloading their assets, while another struggles to keep up.
The subtle but significant impact on price is evident. Returns over 30 and 90 days are positive (approximately +3.8% and +13.4%), yet the journey has been turbulent. Each price increase encounters the selling of older coins, leading to brief rallies. Without robust activity from short-term holders, these upswings tend to feel unstable. The short-term SOPR has only shown fleeting spikes above 1, quickly reverting again, lacking the sustained momentum needed to indicate broad profit-taking.
The SOPR ratio, representing the proportion of long-term to short-term SOPR, encapsulates this situation in a single metric. Currently at 1.77, this ratio is substantially elevated, indicating that long-term holders are realizing far more profit per coin than their short-term peers. Historically, high ratios like this signal periods when the market digests older supply without the influx of new buying pressure. Unless this ratio decreases, any upward movements carry the risk of stalling prematurely.
Volume trends introduce another dimension. The past two weeks saw a slight decline in average spot volume compared to the prior two-week period. While the price continued to climb, the thinning participation increases the risk of misleading breakouts. Without significant cash turnover, short squeezes and rallies driven by derivatives can quickly reverse.
The strong correlation between short-term SOPR and price (with a 30-day correlation of around 0.64) indicates that intraday movements are effectively tracking realized profitability. However, without broader support, those movements lack staying power.
Bitcoin may still rise despite elevated long-term selling, but those gains are hard-won. Until short-term SOPR maintains a consistent position above 1, rallies will lack a sense of conviction. The key indicator to monitor is an extended period where short-term coins are regularly sold at a profit, signaling broader demand and healthier growth. For now, the market structure favors range trading and sharp fluctuations rather than sustained uptrends.
While Bitcoin is not bearish, it is certainly constrained. Gains are being realized, but they come at a cost, as one segment of the market cashes in while another treads water. This two-speed dynamic will continue to influence the market until either demand increases or supply diminishes.
The post Two-speed market leaves Bitcoin caught between profit-taking and hesitation appeared first on CryptoSlate.
