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Could it Soon Pay to be a Bitcoin Hodler? Current BTC Holders Breaking Even

Last Updated July 7, 2023 1:02 PM
Omar Elorfaly
Last Updated July 7, 2023 1:02 PM

Key takeaways

  • Bitcoin’s spent output profit ratio (SOPR) indicates whether coins are worth more than when they were last transferred.
  • A SOPR ratio less than 1 indicates BTC moved was sold at a loss.
  • The current SOPR suggests hodlers are still at a loss despite latest Bitcoin ETF filings.

Bitcoin holders and traders are mostly still unable to book a profit at current market rates, according to CryptoQuant’s  BTC spent output profit ratio (SOPR).

Cryptocurrency markets have seen a resurgence in recent weeks, driven by high-profile applications for spot Bitcoin exchange-traded funds with the United States Securities and Exchange Commission.

The world’s largest asset manager, BlackRock as well as Fidelity are leading the charge for what will be the first-ever spot Bitcoin ETF’s on U.S. soil, should their amended applications be given the green light by the SEC.

Bitcoin’s market value surged from the $26,000 range up above $30,000 in the wake of the news, leading some market analysts to suggest that a drawn-out cryptocurrency bear market might be coming to an end.

What is SOPR and Why Does it Matter?

The spent output profit ratio is used to evaluate the profit ratio of a token holder by comparing the value of an unspent transaction output (UTXO) at the time it was transferred to the time it was created.

“In a simple way, you can estimate if the distribution of spent transaction output is in profit or not.”

UTXO represents cryptocurrency tokens that have been authorized by a sender that are able to be sent or transacted with by a recipient.

CryptoQuant’s methodology looks at the US dollar value of BTC at present and divides it by the US dollar value when the coins were last moved. In layman’s terms, SOPR takes the present value of BTC in a wallet and divides it by its past value. 

SOPR generates a value greater or less than 1. If the SOPR of BTC is greater than 1, it means that the coins moved at a certain timeframe are on average selling at a profit. If the SOPR value is less than 1, this implies that BTC is being sold at a loss.

SOPR that is equal to 1 suggests that holders are able to break even when they move their BTC.

The SOPR value as of 6 July 2023 was 1.0027, suggesting that BTC holders are in a profit-generating window.

It’s worth noting that SOPR only measures on-chain movements and does not include BTC positions held on centralized exchanges.

Is the Bull Market Here?

SOPR is a direct indicator of whether the majority of Bitcoin holders’ coins are in a profitable position and correlates with major price movements. 

Macro conditions have left the wider cryptocurrency ecosystem in a bullish mood given the interest in traditional finance and asset managers looking to gain exposure to Bitcoin and the wider cryptocurrency space.

As CCN previously reported, BlackRock CEO Larry Fink indicated that his firm’s latest application for a Bitcoin ETF is an attempt to “democratize crypto” and make the asset class more accessible to investors.

“We hope our regulators look at these filings as a way to democratize crypto,” Fink told Fox Business on 6 July.

The head of BlackRock added that Bitcoin is “an international asset” and could represent an alternative, decentralized investment vehicle that could shield investors from inflation:

“Crypto is digitizing gold, instead of investing in gold as a hedge against inflation, a hedge against the onerous problems of any country, or the devaluation of your currency, whatever country you’re in.”

The SEC is yet to indicate whether it has begun processing the latest Bitcoin ETF filings. BlackRock’s Bitcoin ETF is set to be offered on the NASDAQ, while Fidelity’s Bitcoin ETF alongside a handful of new applications will be offered on the CBOE.