Short-Term Bitcoin Holders Are Capitulating — Bullish or Bearish Signal?

The Bitcoin market is currently at a crossroads that could make or mar its price trajectory. A certain cohort of investors is panic-selling, and their activities could either trigger a bounce or even further decline in BTC’s price.

On-chain data analyzed by CryptoQuant revealed that Bitcoin short-term holders (STH) are capitulating. This means they are now realizing losses, and such a dynamic signals panic selling among this cohort of investors.

STHs Are Panic-Selling

According to a tweet thread, investors have moved more than 30,000 BTC to crypto exchanges at a loss. Investors usually move their assets to exchanges to sell, while outflows from these trading platforms indicate an intention to hold.

CryptoQuant states that the BTC holdings of short-term investors are not only underwater, but they have also entered a capitulation trend. This comes as BTC hovers around the STH Realized Price, which is the average on-chain cost basis.

Data from CoinMarketCap showed bitcoin changing hands at around $112,900 at the time of writing. While it was above $113,000, more than $3.39 billion in assets were being sold under distress.

Notably, short-term holders are not the only cohort of investors panic-selling; whales are also in distress. Older whales have incurred approximately $26.3 million in losses, while the newer ones have realized up to $184.6 million. Such data indicates that several groups of investors are currently de-risking their holdings, and, unfortunately, CryptoQuant believes this is a negative sign for short-term momentum.

Will BTC Rise or Fall From Here?

With short-term holders in capitulation mode, the STH Spent Output Profit Ratio (SOPR) has fallen sharply below 1. On the other hand, the STH Market Value to Realized Value (MVRV) metric is at 1.

The MVRV’s current level indicates that the average short-term holder is at breakeven, while the SOPR, falling below 1, suggests that many of them are selling below their cost basis. Analysts say both metrics indicate that a wave of top buyers from bitcoin’s recent rally is panic-selling.

Nevertheless, bitcoin’s current price level could lead to either a recovery or a deeper plunge. The asset is trading around the STH Realized Price, which is typically a key support level during volatile phases. If this level holds, BTC could bounce; however, if it breaks, a stronger wave of capitulation may follow.