Bitcoin long-term holders are showing early capitulation signals

Long-term holders of Bitcoin showed an early capitulation as the LTH SOPR fell below 1.0, signaling that some holders of more than six months were selling at a loss.

Bitcoin (BTC) is showing early signs of tension among long-term holders as its LTH SOPR (Spent Output Profit Ratio) recently fell below 1.0, indicating that some holders are starting to sell at a loss.

Although isolated, this move reflects growing uncertainty in the market as BTC trades near $92,000 amid mixed technical signals.

This development is significant because those who hold BTC for longer than six months have historically provided stability during price corrections. Their cautious selling could signal short-term weakness or a shift in sentiment after months of accumulation.

Early LTH Capitulation and Market Reactions

The SOPR for long-term holders measures whether BTC moved on-chain is sold at a profit or loss. A value above 1.0 indicates profit taking, while a drop below 1.0 indicates capitulation, with holders selling at a loss.

According to analysis shared on January 13 by market watcher Darkfost, the benchmark for Bitcoin, which was held for more than six months, briefly slipped below this threshold. This behavior, they say, is typically associated with bear market phases and indicates selling pressure from ‘younger’ long-term holders who bought in the last nine months and are now in the red.

This development is accompanied by a remarkable reduction in the positions of major investors. As previously reported, addresses holding between 1,000 and 10,000 BTC have lost 220,000 BTC in the past year, the fastest rate of decline since early 2023.

While the average 30-day LTH SOPR remains positive at 1.18, it is well below the annual average, around 2.0, reflecting an overall decline in realized profits.

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Diverging signals and market prospects

The market now presents a clash of stories. The LTH SOPR indicates tension, but other analysts point to potentially constructive technical patterns. Chartist Eggag Crypto marked a “hidden bullish divergence” on Bitcoin’s weekly chart, where the price makes higher lows while the RSI momentum indicator makes lower lows, which can precede the continuation of the trend.

Furthermore, the sell-side risk ratio, a measure of the magnitude of gains and losses being realized, has returned to October 2023 levels, implying that distribution is taking place with less conviction.

Looking ahead, the path for BTC appears to depend on a clear break from the current range. Last week it traded between about $90,000 and $92,400, showing modest volatility. Over the past 24 hours, the price rose 1.7% to around $92,200, with short-term holders approaching profitability. noted from investor CW.

Meanwhile, analysts suggest that reclaiming the $92,000-$94,000 zone could lead to renewed buying, but repeated attempts at resistance, possibly the eighth or ninth in recent weeks, according to Ted Pillows, could trigger this. exhaust momentum.