Over the past day, Bitcoin price has shown sideways movement with no obvious intention to breakout. This is a typical weekend price move, but there was an interesting update on the underlying dynamics that keep the flagship cryptocurrency near $70,000.
Bitcoin LTH-SOPR drops to 1.01 — what this means
On-chain analyst GugaOnChain revealed in a recent QuickTake post on CryptoQuant that a battle is currently being waged between different groups of Bitcoin investors.
GugaOnChain cites the Long Term Holder SOPR (Spent Output Profit Ratio) indicator. It tracks whether long-term investors (those who have held Bitcoin for at least 155 days) are selling their tokens at a profit or at a loss. A reading above 1 suggests that these investors are accumulating profits, while a reading below 1 suggests that this is not the case.
According to GugaOnChain, LTH-SOPR is currently at 1.01, reflecting long-term Bitcoin investors exiting the market at break-even or minimal profits. The analyst further explained that this means “veterans are again aggressively defending the acquisition cost of $70,675.”
At the same time, the Puel multiple reflects a reading of 0.60, which GugaOnChain describes as a classic sign that the market is undervalued and Bitcoin miners are starting to become exhausted. Typically, when the Puel multiple drops to 0.5, the miner has surrendered.
It is worth noting that if the Puel multiple continues its approach towards the 0.5 mark, Bitcoin price may continue such bearish movements until the $54,000 realized price is retested.
Institutional demand buffers whale distribution
In particular, GugaOnChain explains that the most important developments still rely heavily on power relations between whale populations. As of March 13th, approximately 16,100 BTC was distributed in bulk among whales holding 1,000 to 10,000 BTC. Normally, such a large drop would cause a sudden drop in Bitcoin price, but the price only returned about 0.33%. GugaOnChain points out that this is due to absorption of supply by different groups of whales and even institutional investors.
Specifically, “Mega Whales” who control over 10,000 BTC and “Dolphins” (holding between 100 and 1,000 BTC) both countered what would have been a catastrophic price drop. At the same time, institutional demand continued unabated over the past week. During this period, spot ETFs recorded total net inflows of $763.4 million, with $180.4 million inflows on March 13 alone.
While the Puell Multiple reflects the likelihood that $54,000 will be visited, GugaOnChain claims that “smart money currently validates $70,000 as an “inflection bottom.”” Therefore, if LTH-SOPR continues to move above 1.0, it will reflect that the current cost of Bitcoin is being protected. Interestingly, the ETF’s conviction capital is already primed for the next big move. At the time of writing, Bitcoin is trading at $71,000, reflecting an increase of 0.5% in 24 hours.
Featured image from Flickr, chart from Tradingview
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