A quant has explained how Bitcoin could still have room to rise based on the trend forming in this popular on-chain indicator.

In a CryptoQuant Quicktake post, an analyst has discussed the Spent Output Profit Ratio (SOPR) of the Bitcoin short-term holders. The SOPR refers to an indicator that tells us whether the BTC investors are selling their coins at a profit or loss.

This metric works by going through the transaction history of each token being sold to check the price at which it was transferred before this. If this previous transaction value for any coin was less than the current spot price it’s being moved at now, its sale contributes to profit realization.

Similarly, the transactions of the coins of the opposite type lead to loss realization. The SOPR adds up these profits and losses for the entire network, and calculates their ratio.

In the context of the current discussion, the Bitcoin SOPR of the entire userbase isn’t of interest, but rather that of only a specific segment of it: the short-term holders (STHs). The STHs include the BTC investors who bought their coins within the past 155 days.

This cohort represents the fickle-minded side of the BTC sector, which easily tends to sell whenever a notable change in the market occurs, like a price rally or crash.

Now, here is a chart that shows the trend in the Bitcoin STH SOPR over the last few years:

As is visible in the above graph, the Bitcoin STH SOPR has remained above the 1 mark in the last few months. In this zone, the profit-taking of the STHs outweighs the loss-taking, so this cohort as a whole could be considered to be making a net profit on its sales.

Recently, the indicator has seen a sharp rise inside this territory. The growth has coincided with the cryptocurrency’s rally to new all-time highs (ATHs), suggesting the STHs have been increasingly falling to the allure of profit-taking that the price surge offers.

Historically, profit-taking from this cohort has been something that has usually led to tops for the asset. As the quant has highlighted in the chart, though, the current value of the STH SOPR is still significantly under the zone that has historically signaled market euphoria.

That said, while the danger of a cyclical top may not be there right now, the indicator is nonetheless inside a zone where local tops have tended to occur for Bitcoin. The high in the first quarter of this year, for instance, also formed when the metric was in this region.

It now remains to be seen whether there is enough demand in the market to mow through this profit-taking spree from the STHs, or if another top would follow for the asset.

Bitcoin has slumped to sideways movement over the last few days as its price is still trading around $90,400.

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