Bitcoin 2021 Bull Market Buyers ‘Capitulate’ As Data Shows 50% Loss
Bitcoin’s (BTC) spot trading below $20,000 is seeing a new “capitulation event” involving a full year’s worth of buyers, research shows.
In one of its Quicktake market updates on September 29, on-chain analytics platform CryptoQuant flagged intense selling by a large number of recent hodlers.
2021 bull market coins ‘have been sold aggressively’
With BTC/USD hovering near levels barely seen since 2020, it’s not just miners who are feeling the pinch.
By analyzing Bitcoin’s Exchange Inflow Spent Output Ages Bands (SOAB), CryptoQuant contributor Edris showed that those who bought between April 2021 and April 2022 have sold coins en masse – for less than they bought them.
“Looking at the chart, it’s clear that coins between 6-18 months ago have been sold aggressively recently,” he concluded.
“These coins were bought between April 2021 and April 2022 at prices above $30K. This signal means that many holders who entered the market during the 2021 bull market and above the $30K mark have recently capitulated and exited the market with a loss of about 50%.”
Such events should not be taken lightly because they tend to happen at the bottom of bear markets. The only question is whether the recent June macro low of $17,600 will be its floor.
Edris added:
“These types of capitulations tend to occur during the final months of a bear market, pointing to a potential bottom formation in the near future.”
Profit warning meets profit potential
Examining Bitcoin’s Spent Output Profit Ratio (SOPR) calculation, fellow CryptoQuant contributor Caue Oliveira highlighted another historical bear market trend repeating itself.
Related: Bitcoin Price Due to ‘Big Dump’ After Passing $20K, Trader Warns
SOPR divides the price paid for a quantity of BTC by the price at which it is sold. The resulting number hovers around 1, with values below indicating a bear market when investors reluctantly take net losses.
According to data from other research firm Glassnode, the unit-adjusted SOPR per September 29 just over 0.95.
The metric is moving back towards 1, after seeing a local bottom in June, suggesting that the best buying opportunity has already been reached.
“When we look at the consumption pattern in the chain of long-term owners, measured through the profit ratio of used production … we can find the biggest selling points at a loss,” Oliveira wrote.
“Historically, these points have been the best risk-adjusted entries in the last two bear market floors.”
Looking ahead, a “maximum pressure point” for long-term holders (LTHs) is on the cards, he added, citing selling pressure easing as SOPR inches higher.
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