Bitcoin’s price has been volatile lately, and recent on-chain data suggests that short-term holders (STHs) – those who bought Bitcoin within the last 155 days – are selling at a loss. This could signal a potential buying opportunity for long-term investors.
Short-Term Holders Capitulating
Analysts are watching the “Spent Output Profit Ratio” (SOPR) indicator closely. SOPR tracks whether STHs are selling at a profit or a loss. When SOPR is above 1, more coins are being sold at a profit. When it’s below 1, more are being sold at a loss.
Recently, the Bitcoin STH SOPR fell below 1, indicating that many recent buyers are selling their Bitcoin at a loss. This is significant because similar capitulation events have historically marked the bottom of Bitcoin price drops. The drop to 0.97 is close to the lows seen during a significant sell-off in August.
Why This Could Be Good News
This panic selling by STHs is often followed by a period of price stability, as the coins move into the hands of long-term holders (“HODLers”). These HODLers are less likely to panic sell, even if the price drops further. Their lower cost basis makes them more resilient to short-term price fluctuations.
What’s Next for Bitcoin?
While Bitcoin’s price has rebounded somewhat since its recent low, it hasn’t fully recovered. Whether the current STH selling is enough to mark the bottom of the market remains to be seen. However, the data suggests that this could be a good time for long-term investors to consider buying.
