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Bitcoin: Are these signs of bearish pressure?

  • The divergence between BTC’s price and its STH-SOPR suggested a price correction. 
  • BTC’s momentum indicators declined, hinting at growing coin distribution.

A bearish divergence has emerged between Bitcoin’s [BTC] price and the Spent Output Profit Ratio (SOPR) of its short-term holders (STH).

Short-Term Holder Spent Output Profit Ratio (STH-SOPR) is a metric used to assess the profitability of short-term holders of a particular crypto asset.

It offers insights into whether investors — who have held a particular asset for three to six months — are in profit.

If the STH-SOPR is above 1, it indicates that short-term holders, on average, are selling their coins at a profit. Conversely, if the STH-SOPR returns a value of less than 1, it suggests that these holders are selling at a loss.

A divergence between an asset’s price and STH-SOPR occurs when they trend in opposite directions. This often indicates a change in investors’ sentiment.

It also means that the market is not accurately pricing in short-term holders’ behavior.

In BTC’s case, currently, a bearish divergence exists when an asset’s price records growth while its STH-SOPR experiences declines. 

Data obtained from CryptoQuant revealed that the king coin’s STH-SOPR assessed on a seven-day exponential moving average (EMA) has trended downwards since the 25th of October. On the other hand, its price has since risen by 10%.

Bitcoin Short Term Holder SOPR EMA 7 scaled

Source: CryptoQuant

In a recent report, pseudonymous CryptoQuant analyst Crypto Sunmoon noted that, historically, a bearish divergence between BTC’s price and its STH-SOPR has typically been followed by a price decline.

According to Sunmoon:

“The current STH-SOPR bearish divergence has been in place for over a month now, so we need to be prepared for a drop in the price of Bitcoin.”

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Source: CryptoQuant

Bitcoin bulls under attack?

As BTC continued to face resistance at the $38,000 price level, its Weighted Sentiment became negative once again. At press time, the king coin’s Weighted Sentiment was -1.163, data from Santiment showed.

Bitcoin BTC 07.41.57 29 Nov 2023

Source: Santiment

The persistent profit-taking activity has resulted in coin holders’ sentiment slowly changing from positive to negative.  

How much are 1,10,100 BTCs worth today?

Although its key momentum indicators remained above their respective center lines on a daily chart at press time, BTC’s Relative Strength Index (RSI) and Money Flow Index (MFI) indicators declined steadily over the last two weeks. 

This showed that the coin distribution gained momentum even though bulls remained in control of the market.  

BTCUSD 2023 11 29 07 42 55

Source: BTC/USDT on TradingView

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