With this consolidation now lasting several months, some STHs seem to have taken the opportunity to increase their exposure.
As a result, their SOPR (Spent Output Profit Ratio) has been trending upward since February. To capture the underlying trend, a 1 month average is used, which has increased from 0.977 to 0.987.
The SOPR is an indicator based on realized profit when a UTXO is spent, calculated by comparing the spending price to the acquisition price.
STHs are therefore realizing fewer and fewer losses.
On a daily timeframe, the SOPR is attempting to move back above the 1.0 ratio, which represents the neutral level.
Since October, the SOPR has remained negative most of the time. Every attempt to move back into positive territory failed, as each rebound was used as an exit opportunity.
A prolonged period of negative SOPR is characteristic of a bear market.
For a more positive dynamic to develop, investors, particularly STHs who tend to be more reactive and unstable, need to regain confidence.
For confidence to return, it is essential to see STHs realizing profits again. When profits appear, confidence builds, and the market gradually becomes more resilient as investors hold their positions longer in expectation of greater gains.
A market with latent profit is therefore necessary, up to a certain extent.
Written by Darkfost