Bitcoin’s long-term ownership capitulation is approaching the bottom zone, but not quite there yet
Data on the chain show Bitcoin’s long-term ownership capitulation has deepened recently, but has not yet entered the historic bottom zone.
Bitcoin long-term holder SOPR continues to observe deep values below ‘1’
As explained by an analyst in a CryptoQuant post, long-term BTC holders have realized losses in recent weeks.
“Profit ratio for used production” (or SOPR for short) is an indicator that tells us whether Bitcoin investors are currently selling at a profit or at a loss.
The metric works by checking the chain of each coin sold to see what price it was last moved to. If this last sale value of a coin was less than the current BTC price, that coin is now sold at a profit.
Related reading | Could this Bitcoin relationship have hints for a bottom?
On the other hand, the previous price, which was higher than it is right now, would indicate that the coin has lost something.
When SOPR is greater than one, it means that the total Bitcoin market is currently reaping some profits. On the contrary, a value less than it indicates a loss realization is going on among BTC investors right now.
The “long-term holder” group includes all BTC investors who held their coins for at least 155 days before selling or moving them. The chart below shows the trend in 14-day MA SOPR specifically for these LTHs:
The value of the metric seems to have been going down recently | Source: CryptoQuant
As you can see in the graph above, the quantum has marked all relevant trend points for the 14-day MA Bitcoin long-term holder SOPR.
It seems that the most important bottoms in the cryptohistory were formed each time the value of the indicator dropped to a value of around 0.48 (indicated by the green line in the chart).
Related reading | $ 15k Possible bottom for Bitcoin? “Delta Cap” it says
This type of value occurs when LTHs go into deep capitulation. Since this is the BTC cohort that is least likely to sell at some point, large loss realizations from them may signal that the bear bottom is approaching.
Currently, the indicator is also below 1, but it still has a value of about 0.62, slightly higher than the historical bottom zone. This suggests that although Bitcoin may be heading for a bottom, it is not quite there yet.
BTC price
At the time of writing, Bitcoin’s price is floating around $ 19.4k, down 9% in the last week. The chart below shows the trend in the value of the crypto over the last 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
