dollar flies (QuinceCreative/Pixabay)

Bitcoin's (BTC) near-term outlook looks constructive as blockchain data suggests that short-term holders of the cryptocurrency are cashing in on profits.

According to blockchain analytics firm Glassnode, the seven-day moving average of short holder's (STH) spent product profit ratio (SOPR) recently rose above 1.

"After a short period of losing coins, STH-SOPR is now back above 1," analysts at Blockware Solutions wrote in a weekly bulletin. "This is bullish for near-term price action as it indicates surrender from short-term holders."

A short-term SOPR greater than 1 means that the average short-term holder in the market is selling coins at a profit. A reading below 1 is considered a sign of surrender, while a reading of 1 indicates that the average short-term owner has just broken even.

SOPR is calculated by dividing the realized dollar value of the spent product (UTXO) by the value at the time of product creation to reflect the realized profit rate for all coins carried on the chain. A short-term SOPR holder focuses on all wallets that hold their coins for less than 155 days.

STH SOPR has historically stayed above 1 in bull markets. This is understandable, as rallies allow short-term holders – mostly new entrants, active traders or weak hands – to liquidate their holdings at a price higher than their purchase price.

Additionally, the area around 1 tends to act as a support level during bull runs, as owners who expect the price to continue to rise see their cost basis as a profitable buying opportunity. On the flip side, level 1 acts as resistance during downtrends.