On-chain Bitcoin indicators reveal weakening of SOPR: what does it mean for investors?

The Bitcoin market faces new pressures after a notable deterioration in short-term indicators. The latest data shows BTC trading around $87.37K, reflecting a significant drop from its all-time high of $126.08K. In this volatile context, analysts observe concerning signals in the behavior of short-term holders (STH).

Short-term SOPR liquidation signals

The SOPR (Spent Output Profit Ratio) indicator for STH has fallen below the critical level of 1, a behavior that generally indicates panic selling among investors. The 7-day moving average of the STH SOPR remains near 0.99, suggesting that selling pressure continues to intensify in the market. This contrasts with previous periods of higher confidence and signals an emotional shift in the decision-making of short-term traders.

On-chain analysis reveals sentiment shifts

Profit and loss blocks on the network show an extended pattern of realized losses. These on-chain data, analyzed by experts like Axel Adler, reveal that many participants are liquidating positions with negative returns. This behavior is characteristic of markets dominated by uncertainty and driven by fear-based selling.

Technical pressure on moving averages

On a technical level, the outlook becomes more challenging. The 200-week moving average, a key indicator of long-term sentiment, faces downward pressure, while the 50-week line maintains a bearish slope. This confluence of negative signals across different timeframes reinforces the narrative of short-term weakness and raises doubts about Bitcoin’s immediate price direction.

The combination of the low STH SOPR, on-chain liquidation data, and pressure on moving averages suggests that the Bitcoin market continues to navigate a period of stress, where short-term investors are re-evaluating their positions in an environment of declining confidence.