Avocado_onchain2025-02-03

Rising Short-Term SOPR Lows Reflect Growing Investor Confidence

The short-term SOPR (Spent Output Profit Ratio) is a valuable metric for identifying local bottoms in Bitcoin price movements. In the past, when investors lacked clear knowledge and information about Bitcoin, price declines often led to panic selling. Particularly in bull markets, short-term investors, unlike long-term holders who use dips as buying opportunities, tend to sell at a loss during corrections. This makes short-term SOPR a crucial indicator, as Bitcoin has historically rebounded after short-term holders exited at a loss. The duration of such corrections varies, but applying a 30-day moving average helps clarify these trends. One key observation is that, over multiple market cycles, more short-term investors have gained confidence in Bitcoin셲 long-term value. As a result, the amount of panic selling has significantly decreased. Comparing past cycles, the lows in short-term SOPR have been gradually increasing, meaning corrections have become shallower. While Bitcoin previously experienced drawdowns of 40-60%, this cycle has seen corrections limited to around 20-30%, reflecting a more resilient upward trend. This suggests that many investors remain optimistic about Bitcoin셲 long-term trajectory. While additional panic selling could still occur, a drastic price drop similar to previous cycles seems unlikely under normal conditions. Of course, unforeseen macroeconomic shocks such as a global market downturn like the COVID-19 crash could trigger a deeper correction. However, in the current bull market, price pullbacks are likely to remain within the 20-30% range before Bitcoin resumes its upward trend.