Over the last day, the price of Bitcoin has shown a sideways movement, without any apparent intention of a breakout. Although this is a typical weekend price action, there has been an interesting update on the underlying dynamics, which is keeping the flagship cryptocurrency around $70,000.
Bitcoin LTH-SOPR falls to 1.01 – What it means
In a recent QuickTake post on CryptoQuant, chain analyst GugaOnChain reveals that the battle between different groups of Bitcoin investors is currently underway.
GugaOnChain refers to the Long-term Holder SOPR (Spent Profit Ratio) metric, which tracks whether long-term investors (who have held Bitcoin for at least 155 days) are selling their tokens at a profit or at a loss. A reading above 1 indicates that these investors are accumulating profits, while a reading below 1 indicates otherwise.
According to GugaOnChain, the LTH-SOPR is currently at 1.01, which reflects that long-term Bitcoin investors are exiting markets on breakouts or with minimal profits. The analyst further explains that this means that “experts are once again aggressively defending their purchase price at $70,675.”
At the same time, the Puell Multiple reflects a reading of 0.60, which GugaOnChain describes as a typical sign that the market is undervalued enough and that Bitcoin miners are starting to tire. Usually, when the Puell Multiple drops to 0.5, it indicates a capitulation among miners.
It is worth noting that if the Puell Multiple should continue its approach to the 0.5 mark, the price of Bitcoin may follow such a downward move until the Action Price is retested at $54,000.
Institutional requirements whale distribution buffers
It is worth noting that GugaOnChain explains that the most important development still depends on the dynamics between shark cohorts. As of March 13, a public distribution of approximately 16,100 BTC has taken place among whales holding between 1,000 and 10,000 BTC. Normally, such a large sell-off should lead to a sudden drop in the price of Bitcoin, but prices only recovered about 0.33%. GugaOnChain points out that this depends on the absorption of supply by various groups of whales and even institutional investors.
In particular, “Mega Whales” with more than 10,000 BTC, along with “Dolphins” (between 100 and 1,000 BTC), both resisted what should have been a devastating drop. Meanwhile, institutional demand was unchanged during the week. During the period, spot ETFs recorded a total of $763.4 million in net inflows, with only $180.4 million coming in on March 13.
While the Puell Multiple reflects the possibility of a visit to $54,000, GugaOnChain insists that ‘Smart Money is currently confirming $70k as a “variable floor”. Thus, if the LTH-SOPR is above 1.0, it indicates that the current value of Bitcoin has been successfully hedged. Interestingly, the mutual fund ETF is already positioned for its next big move. As of this writing, Bitcoin is trading at $71,000, reflecting a 0.5% gain in 24 hours.
Featured image from Flickr, chart from Tradingview
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