- According to an analyst, BTC LTH SOPR had been trending below one since the end of May 2022.
- The mining activity on the BTC network was strongly influenced by the price of King Coin.
An on-chain assessment of major coin performance has revealed that bitcoin’s year-to-date (YTD) price rally (BTC) has led to an increase in the long-term earnings-to-expense ratio (LTH SOPR) metric. ).
According glassnode academyThe SOPR metric is used to understand general market sentiment and to analyze the profitability and losses that may occur during a specific period for a particular crypto asset.
Also, the indicator tracks the amount of profit received for all on-chain coin transactions.
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As far as BTC is concerned, LTH SOPR provides insight into the psychology of long-term holders during a bear market. When the metric is below one, it suggests that long-term holders are feeling losses and may be motivated to sell.
Conversely, when the metric is above one, long-term holders benefit and may receive incentives to hold or deposit more BTC.
pseudonymous cryptoquant analyst biggest merchant It was noted that market participants, including long-term investors, according to LTH SOPR, are likely to suffer losses due to the slowdown in the 2022 business year.
According to Greatest Trader, the LTH SOPR has been trading below one since the end of May 2022, indicating that long-term holders continued to lose money.
However, with a general increase in the crypto market since the beginning of the year, “the metric started to recover and moved up slightly due to the increase in the bitcoin price,” Greatest Trader found.
While this could be taken as conclusive proof that a bull market was taking place, Greatest Trader claimed that:
“However, it is still too early to name the $15.5K level as the bottom of the bear market, as the recent impulsive rally may just be a bull trap.”
The analyst further cautioned that it was advisable for traders and investors to closely monitor the SOPR metric in the near term to gauge the likely direction of price and market sentiment.
Watch the miners.
Mining activity on the BTC network significantly affects the price of King Coin and vice versa. According to CryptoQuant analyst ha haMiners are the only entity that incurs ongoing costs, such as running electricity, so their behavior is always tied to the BTC price.
Therefore, studying metrics such as the Poole Multiple, which compares projected 365-day average earnings with miners’ short-term earnings, becomes important in determining the future direction of the BTC price, as it provides insights into the miner behavior.
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Gah found that since the last Local Value Fund in November 2022, the average income for miners has doubled from the previous year.
This increase in average revenue could cover mining costs, reducing the need for miners to sell their BTC and, in turn, reducing selling pressure in the market.
According to Gah, in the short term, multiple values above 1.00 are needed to gauge the likely future behavior of miners.
If average earnings continue to rise, miners may not need to sell their BTC to cover their costs. Therefore, this is an important metric to pay attention to.
Source: CryptoQuant
