Over the weekend, Bitcoin experienced a significant drop in value, falling from $70,090 on April 11 to $64,400 on April 13. Despite concerns about escalating tensions in the Middle East and a potential market downturn, Bitcoin managed to stabilize around $66,000 by April 15.
To better understand these market fluctuations, it is essential to examine the behaviors of different investor groups, particularly short-term holders (STHs) and long-term holders (LTHs). STHs tend to react more impulsively to price changes and external events, often selling off their assets during market dips. On the other hand, LTHs typically maintain their positions during volatility, demonstrating a commitment to Bitcoin’s long-term value.
One metric used to assess market reactions is the spent output profit ratio (SOPR), which measures the profit realized by coins moved on-chain. When SOPR values are above 1, it indicates that coins are being sold at a profit, while values below 1 suggest selling at a loss. To gain a deeper insight, it is important to analyze STH SOPR and LTH SOPR separately to capture the behavior of these distinct groups.
During the recent dip, the STH SOPR dropped significantly from 1.009 on April 12 to a low of 0.979 on April 13, indicating that short-term holders were selling their Bitcoin at a loss. Although this metric slightly recovered to 0.984 by April 14, it remained below the breakeven threshold of 1.
In contrast, LTHs showed more resilience during the dip. As Bitcoin’s price fell below $70,090, the LTH SOPR rose from 2.271 on April 11 to 2.913 on April 12, suggesting that long-term holders were still selling at a profit despite the market downturn. By April 14, the LTH SOPR had adjusted slightly to 2.358 but remained well above the breakeven point.
The varying responses of STHs and LTHs highlight the importance of analyzing different investor groups. While short-term holders exhibited panic selling behaviors during the dip, long-term holders remained confident in their positions. This divergence in sentiment emphasizes the importance of considering both short-term and long-term outlooks in the cryptocurrency market.
Overall, the weekend dip in Bitcoin’s price revealed contrasting reactions between short-term and long-term holders, underscoring the resilience of the latter group in the face of market volatility.
