On-chain data shows that bitcoin long-term holder capitulation has deepened recently, but has yet to enter all-time lows.
Bitcoin Long-Term Holders Continue to Observe Deep Prices Below SOPR ‘1’
As explained by an analyst in a Cryptoquant post, BTC long-term holders have been realizing the losses in recent weeks.
The “Spent Output Profit Ratio” (or SOPR for short) is an indicator that tells us whether bitcoin investors are currently selling at a profit or loss.
The metric works by checking the on-chain history of each coin sold to see what price it was last carried. If this last sell price of a coin was less than the current BTC price, that coin is now sold at a profit.
Related Reading | Could this bitcoin ratio signal for a bottom?
On the other hand, the previous price being more than one now would mean that the coin has suffered some loss.
When the SOPR is greater than one, it means that the overall bitcoin market is currently making some profits. Conversely, a lower value means that loss recovery is currently underway among BTC investors.
The “long-term holders” group includes all BTC investors who held their coins for at least 155 days before selling or transferring them. The chart below shows the trend in the 14-day MA SOPR for these LTHs in particular:
The value of the metric seems to have been going down recently | Source: CryptoQuant
As you can see in the above graph, the volume marks all relevant points of the trend for the 14-day MA of Bitcoin long-term holder SOPR.
It seems that major bottoms in the history of crypto were formed when the value of the indicator fell to a value of around 0.48 (denoted by the green line in the chart).
Related Reading | $15k Potential Bottom for Bitcoin? “Delta Cap” Says So
This kind of value is when LTH goes into deep surrender. Since this is the least likely for BTC Group to sell at any point, receiving large losses from them could indicate that a bear bottom is approaching.
Currently, the indicator is also below 1, but its value is still around 0.62, slightly higher than the all-time low. This would suggest that bitcoin is heading downwards, but it is not quite there yet.
At the time of writing, bitcoin was priced around $19.4k, down 9% over the past week. The chart below shows the trend in the value of crypto over the past five days.
Looks like the price of the coin has been moving sideways over the last few days | Source: BTCUSD on TradingView
Featured image from Brent Jones on Unsplash.com, charts from TradingView.com, CryptoQuant.com