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A quant has cautioned that a Bitcoin bull market may still be too soon to call, as this on-chain indicator is yet to meet the proper conditions. Bitcoin Long-Term Holder SOPR (SMA 14) Has Still Not Crossed Above 1 According to an analyst in a CryptoQuant post, the recent rally in the BTC price could just be a bull trap. The relevant indicator here is the “Spent Output Profit Ratio,” which tells us whether the average investor is selling their Bitcoin at a profit or at a loss right now. When the value of this metric is less than 1, it means the overall market is realizing some losses with their selling currently. On the other hand, values above the threshold imply the average holder is moving coins at a net amount of profit at the moment. At SOPR exactly equal to 1, the profits being realized in the market are equal to the losses, which suggests that the investors as a whole can be thought to be breaking even at this mark. One of the two main investor cohorts in the BTC market is the “long-term holder” (LTH) group, which includes all investors that have been holding onto their coins since more than 155 days ago, without having moved or sold them from a single wallet address. Now, here is a chart that shows the trend in the 14-day simple moving average (SMA) Bitcoin SOPR specifically for these LTHs over the history of the cryptocurrency: Looks like the 14-day SMA value of the metric has seen some rise in recent days | Source: CryptoQuant As shown in the above graph, the 14-day SMA Bitcoin LTH SOPR has been below the 1 mark since May 2022. This means that this cohort has been selling its coins at a loss all this while. In the chart, the quant has also marked the trend that the indicator followed during the last couple of cycles. It seems like this metric was under this level in the previous bear markets as well. Related Reading: Bitcoin Puell Multiple Hits 14-Month High, Here’s What It Means The reason the LTHs start selling at losses as a bear market takes hold is that their acquisition cutoff (155 days) then also covers the preceding bull run, which naturally had much higher entry prices. Some of these investors who bought at the top capitulated as the prices plunge in the bear market, thus leading to the SOPR turning red. Once this capitulation finishes and the capital rotates into other investors at the lower bear market prices, however, the market starts recovering. From the graph, it’s apparent that a break of the 14-day SMA Bitcoin LTH SOPR above 1 (a sign that LTHs are now selling at profits) has usually led to bull runs in the past. With the latest rally, the metric has improved a bit, but its value has still not touched the 1 level. Related Reading: Bitcoin Price At Risk of Downside Thrust Before A Fresh Increase “It is still too early to name the $15.5K level the bear market’s bottom, as the recent impulsive rally could just be a bull trap,” warns the analyst. “It is important to closely watch the long-term holders’ SOPR metric in the short term to anticipate the price direction.” BTC Price At the time of writing, Bitcoin is trading around $24,800, up 14% in the last week. BTC continues to consolidate | Source: BTCUSD on TradingView Featured image from Becca on Unsplash.com, charts from TradingView.com, CryptoQuant.com