On-chain data indicates that Bitcoin short-term holders have been experiencing significant sell-offs at notable losses recently. This trend has historically marked crucial bottoming points in the cryptocurrency’s price movements.
Bitcoin Short-Term Holders See SOPR Plunge Under 1.0
In its latest weekly report, the on-chain analytics firm Glassnode delves into the behavior of Bitcoin short-term holders amid the recent market downturn. The term “short-term holders” (STHs) refers to investors who acquired their Bitcoin within the last 155 days, a group that notably includes new market entrants who may lack confidence during price volatility.
According to Glassnode, “Understanding this cohort’s behavior aids market observers in identifying moments of extreme seller exhaustion, which have historically presented opportunities for more resilient, long-term investors.” Factors influencing this group’s decision-making often lead to rapid sell-offs during market turbulence.
Recent sharp price movements within the cryptocurrency marketplace have compelled these short-term holders to sell. Whether this sell-off is characterized by profit-taking or loss realization can be assessed through the use of the Spent Output Profit Ratio (SOPR) indicator.
The SOPR indicator analyzes the transaction history of tokens sold by STHs to evaluate their initial acquisition price. If the selling price exceeds the purchasing price, it classifies the transaction as profitable; conversely, if the selling price is less than the purchasing price, it is classified as a loss. When the SOPR is greater than 1, it indicates that profit realizations dominate; when it falls below 1, it suggests that losses are being predominantly realized by the cohort.
The latest analytics illustrate a decline in the Bitcoin STH SOPR, which recently slipped under the critical level of 1, indicating that new investors have begun selling at a loss. The metric even dropped to a low of 0.97, nearing the lows observed during the August capitulation event.
As highlighted in the report, “This persistent downward momentum has left new investors feeling unsettled, resulting in extensive panic selling at a loss. Such conditions often pave the way towards local seller exhaustion—an event that long-term investors may monitor for potential re-entry points into the market.” The prevalent trend of STH capitulation tends to facilitate a transfer of coins into the possession of more steadfast holders (often referred to as HODLers), who are better equipped to withstand future price declines due to their acquired lower cost basis post-crash.
Whether the current trend of loss-taking among short-term holders will sufficiently lower Bitcoin’s price to reach a stable bottom remains uncertain.
BTC Price
Despite some upward movement from this week’s lows, Bitcoin’s current price stands at $83,200, indicating it has yet to fully recover from its recent decline.
