Bitcoin Short-Term Holders Now Capitulating: Bottom Here?

Bitcoin Short-Term Holders Now Capitulating: Bottom Here?

On-chain data shows that short-term Bitcoin holders have begun selling at a loss. Here’s what this could mean for the cryptocurrency’s price.

Bitcoin short term holder SOPR just dropped below 1

As CryptoQuant author Axel Adler Jr points out in a new report mail On X, Bitcoin’s SOPR to short-term holders has fallen into the red recently.

“SOPR” here refers to an on-chain indicator that tells us whether BTC investors are selling their coins at a profit or loss. The metric works by looking at the transaction history of each coin sold/transferred on the network to see what price it was transacted at before.

If the last transfer price of the currency is lower than the current spot value for which it is currently being sold, it can be assumed that selling it results in making a profit. Likewise, transactions for tokens of the opposite type correspond to loss tolerance. SOPR collects the profits and losses made across the network in this way and calculates their ratio.

In the context of the present topic, the SOPR of only a specific segment of the sector is of interest: short-term equity holders (STHs). This group consists of investors who have purchased their coins within the past 155 days.

When the indicator value is greater than 1, it means that STHs as a whole are selling their coins at a profit. On the other hand, its presence below the threshold means that loss realization is prevalent among these holders.

Now, here’s a chart showing the trend in the 7-day simple moving average (SMA) for Bitcoin STH SOPR over the past decade:

As can be seen in the chart above, Bitcoin’s 7-day simple moving average STH SOPR rose to highs above the 1 mark during the last two months of 2024, implying that the group was engaging in significant profit-taking during the asset’s run. to its highest levels ever.

This was nothing unusual, as STHs have historically proven to be the fickle side of the market, selling at first sight of any major market change, such as a rally or crash.

As expected, with the ensuing market decline of the past few weeks, STHs showed another shift, as profit-taking calmed down and loss-taking began to take control. The index’s 7-day simple moving average has fallen to 0.99, indicating that making a loss is now ahead of making a profit.

From the chart, it is clear that previous capitulation events have generally coincided with Bitcoin peaks. However, so far, the level of loss is not very noticeable, which may indicate that the indicator may have to decline a little more before BTC finds a bullish reversal.

Bitcoin price

Bitcoin erased the recent rebound as its price saw another 3% decline over the past day, taking it to $91,600.

Bitcoin price chart

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