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Analysis of the STH-SOPR (Short Term Holder Spent Output Profit Ratio)
The STH-SOPR (Short Term Holder Spent Output Profit Ratio) indicator is a tool that gauges the profitability of Bitcoin transactions held over a period ranging from an hour to 155 days. Put simply, this indicator measures whether the Bitcoins transferred by short-term investors have, on average, generated a profit or a loss. It is calculated by dividing the dollar value of Bitcoins sold (spent output value) by their dollar value at the time of their acquisition (creation value). This indicator focuses solely on short-term transactions, excluding movements of Bitcoins held for less than an hour or more than 155 days. Thus, it covers Bitcoins with a lifespan between an hour and 155 days. If the STH-SOPR value is greater than 1, it means that, on average, Bitcoins are being sold at a profit. If it's exactly equal to 1, Bitcoins are sold neither at a gain nor a loss. If it's less than 1, it implies that Bitcoins are being sold at a loss. An increase in the STH-SOPR value indicates that trading conditions are becoming more profitable for short-term investors. Conversely, a decrease in this value suggests that these conditions are becoming less profitable. As we have observed, the profitability/loss ratio of short-term BTC holders fluctuates around the value of 1. This indicates that short-term holders are selling their assets for a very slight profit or realizing a small loss. This suggests that these holders are skeptical of price changes (volatility).