Bitcoin’s Short-Term Holders Sell at Loss, Signaling Market Shifts

January 22, 2025 by Bena Ilyas

• Short-Term Holders (STH) selling at a loss signals a market shift, with the STH SOPR turning negative.

• Bitcoin’s MVRV ratio of 2.4 suggests a potential support level, indicating a possible price inflection point.

• Bitcoin’s bullish structure remains above $90K, with key support around the $87,700-$90,000 range.

As Bitcoin continues its upward price momentum, a critical on-chain metric has emerged, offering insights into the market’s future direction. The Short-Term Holder Spent Output Profit Ratio (STH SOPR) has recently shown that short-term holders (STHs) have begun selling at a loss, marking an important shift in market behavior.

The STH SOPR compares the 30-day STH SOPR to its 365-day counterpart, providing insight into whether short-term investors realize profits or losses. The metric suggests that STHs are now more likely to sell at a loss, a shift from earlier trends where profits were consistently realized.

The Implications of STH Losses for Bitcoin’s Market

CryptoQuant analyst Darkfost revealed that when the STH SOPR turns negative, two possible scenarios unfold: holding or capitulation. Some STHs may decide to have their Bitcoin, viewing their realized price as a potential support level. Others may capitulate, triggering additional market corrections and downward pressure on Bitcoin’s price.

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Historically, such periods of STH losses have acted as attractive entry points for long-term investors, leading to potential accumulation opportunities. However, Darkfost emphasizes that while the negative STH SOPR signals a potential opportunity, further confirmation from additional metrics and broader market sentiment is essential.

Another crucial indicator to monitor is Bitcoin’s Market Value to Realized Value (MVRV) ratio, which measures whether BTC is overvalued or undervalued. According to CryptoQuant analyst Tugbachain’s data, the MVRV ratio currently stands at 2.4, approaching a critical support level. If the ratio breaks below this support and reverses its downtrend, it could climb back into the 4-6 range, associated with BTC’s price peaks.

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The MVRV ratio has proven to be a reliable tool for identifying Bitcoin’s market tops and bottoms over multiple halving cycles. Tugbachain’s analysis adds weight to the growing sense that Bitcoin’s price could be at an inflection point, with potential for both upside and downside movements depending on how these on-chain indicators evolve.

Complex interactions between short-term and long-term holders often shape Bitcoin’s market dynamics. As these two groups adjust their positions, their actions often provide insight into the larger market trends. The interplay of MVRV and STH SOPR will be crucial in determining whether BTC’s price will continue its climb or face a correction shortly.

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Bitcoin’s Bullish Structure Holds Above $90K

Glassnode has outlined a “critical zone” for Bitcoin’s price between $95,000 and $90,000. The range has seen significant realized losses since November 2024, with strong seller capitulation and increased buying pressure. As long as BTC’s price remains above this range, its bullish structure remains intact, providing a foundation for further price increases.

Crypto educator Mihir highlights that while BTC may experience volatility in the short term, major technical support levels provide traders with a clearer understanding of potential downside risks. He suggests that the $90,000-$80,000 range is a “safe retracement” level, which could serve as a strong support zone for BTC in the event of a price correction.

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The technical support of around $87,700, based on the average transaction price of BTC on-chain, confirms this range further. With Bitcoin’s market value at these critical levels, investors and traders are closely watching for any signs of market shifts that could influence the next phase of price action.

Read More: Bitcoin Breaks New Record: What History Says About the Next Price Peak