STH SOPR Indicator Falling Lights Up Alert for Bitcoin: What Does It Mean?

The Bitcoin market is going through a period of uncertainty. The STH SOPR Index (Spent Output Profit Ratio of short-term holders) has fallen below 1, a sign that small investors are unloading their positions at a loss. When this indicator drops below the 1 mark, it means that most outgoing transactions are incurring losses, revealing a capitulation scenario among short-term traders.

What does this movement represent?

A decline in the STH SOPR below 1 historically precedes periods of higher volatility. On-chain data suggest that risk appetite among investors is shrinking, creating conditions for additional selling pressure. This dynamic is particularly concerning because it shows that even those who bought recently are not able to profit from their positions.

Bitcoin oscillating around critical levels

Currently, Bitcoin is trading near $92.22K, but the real focus is on the 200-day moving average, which forms a crucial support level between $86,000 and $88,000. This is an important inflection point: a close below this range could trigger a cascade of deeper losses, as algorithms and stop-loss protections would activate automatic sell orders.

The outlook ahead

The combination of the declining STH SOPR with pressure on technical supports creates a challenging environment for buyers. On-chain data continue to signal an evolving downtrend, suggesting that caution is essential for those operating at this moment.