Bitcoin short-term holders (STHs) are currently experiencing one of the toughest capitulations in the recent months. On-chain statistics provided by CryptoQuant show that the STH Spent Output Profit Ratio (SOPR) has dropped below 1 significantly.
This shows that those investors who joined the market recently are getting losses which is a case of panic selling. More than 30,000 BTC, equivalent to over $3.39 billion of current value, has already been transferred to exchanges at a loss which points to the increased distress in the short-term cohort.
Exchange Inflows Show Distress Selling
Recent on-chain flows attest to the fact that capitulation is underway. In a mere matter of 24 hours, over 30,000 of the Bitcoin were sent to exchanges at a loss, indicating that a high number of investors are hastening to move positions despite the unfavourable conditions. This massive movement highlights the way fear and uncertainty are seizing the market.
The distressed selling at an average valuation of 113000 per Bitcoin is an indication of the financial strain that these investors are experiencing.
Price Holding at Key Support Level
Bitcoin price is in a critical position despite heavy selling. It is now moving near the Short-Term Holder Realized Price- the average position of new investors. This level has in the past served as a good cushion zone during volatile times.
The market may experience a short run recovery in case this support materializes. Yet, with Bitcoin falling below it, it might result in a second phase of capitulation, which would cause the losses to increase.
Bitcoin Whale Activity Reflects Mounting Stress
Retail as well as smaller short-term investors are not the only ones expressing signs of stress. New and old whale cohorts are registering heavy losses. It has been seen that, new whales have experienced realized losses of 184.6 million dollars and older whales experienced $26.3 million realized losses.
This de-risking action is that even massive holders are not immune to the present volatility. When whales start to trim exposure, it usually sends a warning to the larger market.
The Breakeven Paradox: MVRV vs SOPR
One of the objections of the present-day market is the disparity between the Short-Term Holder MVRV and the SOPR measures.
The STH-MVRV is currently circling at 1 indicating that short-term holders are breaking even on average. Nonetheless, reading of SOPR less than 1 indicates that most are selling at a loss.
The seeming case of such contradiction denotes that a large group of those who purchased at the last spurt is panic-selling less than they were initially buying, pull the feelings down.
What Comes Next?
The implication on the market is simple: Bitcoin is facing a significant support level. Provided that the Short-Term Holder Realised Price holds, there is a chance of a relief bounce as the panic selling diminishes.
However, when this support fails, a new wave of capitulation may increase much faster and the prices would fall significantly. The coming few days will be pivotal in establishing the ability of Bitcoin and whether it will stabilize or persist in the sell-off.
