During Bitcoin’s current surge in price, an important on-chain Bitcoin metric has emerged that provides insights into the market’s future direction.

Known as the Short-Term Holder Spent Output Profit Ratio (STH SOPR), this indicator reveals the behavior of Short-Term Holders (STHs) who have started selling at a loss.

By comparing the 30-day STH SOPR to its 365-day counterpart, this metric indicates whether short-term investors are profiting or experiencing losses.

Bitcoin Short-Term Holders Facing Losses

To understand the implications of Short-Term Holders selling at a loss for the market, it is crucial to grasp its broader significance. Darkfost, the CryptoQuant analyst who unveiled this data explains that when STH SOPR turns negative, it often leads to “holding” or “capitulation.”

Some STHs may choose to hold onto their BTC using their realized price as a support level, while others might capitulate, triggering further market corrections. Historically, periods of STH losses have signaled attractive entry points for long-term investors.

BTC short-term holders start to sell at a loss
“Historically, when this metric turns negative, it often highlights attractive entry points for the long term.” – By @Darkfost_Coc
Read more https://t.co/A4jLhI7hMG pic.twitter.com/zeg31MtQqc
— CryptoQuant.com (@cryptoquant_com) January 21, 2025

However, confirming such signals requires analyzing additional metrics and assessing the overall market sentiment. In Darkfost’s words:

Historically, when this metric turns negative, it often highlights attractive entry points for the long term. However, it’s essential to confirm such signals by cross-referencing with other metrics and assessing the broader market sentiment.

MVRV Ratio Predicts Market Trends

In addition to the STH realized losses indicating potential entry points for long-term investors, Bitcoin’s Market Value to Realized Value (MVRV) ratio is hinting at an emerging trend for Bitcoin.

Tugbachain, another CryptoQuant analyst, shared in a post on the CryptoQuant QuickTake platform that the MVRV ratio currently stands at 2.4 and is nearing a critical support level.

If the ratio drops below this support and then reverses its downward trend, it could climb back to the 4-6 range historically associated with Bitcoin peaks, the analyst suggests.

For context, the MVRV ratio assesses whether a cryptocurrency is overvalued or undervalued by comparing its market capitalization to its last transacted value.

According to Tugbachain, the MVRV ratio has been a reliable tool for identifying market tops and bottoms over multiple halving cycles, as well as short-term fluctuations, lending credibility to the current indication.