Bitcoin Holders Selling At Large Losses, Is Final Capitulation Here?

On-chain data shows Bitcoin holders have been selling at large losses on the level of previous bottoms, suggesting that the final capitulation for the cycle may be here.

As pointed out by an analyst in a CryptoQuant post, the BTC market participants may be coming close to surrendering.

The relevant indicator here is the “Spent Output Profit Ratio” (SOPR), which tells us whether Bitcoin investors are selling their coins at a profit or at a loss right now.

When the value of this metric is greater than 1, it means the average holder is moving their coins at a profit currently.

On the other hand, the indicator having values less than the threshold suggests the market as a whole is realizing some amount of loss at the moment.

Naturally, the SOPR having values exactly equal to 1 implies the investors are just breaking-even on their selling.

The “Adjusted SOPR” (aSOPR) is a modified version of this metric that doesn’t take into account movement of all those coins that were sold within an hour of being bought. This helps remove noise from the data that won’t have any significant impacts on the market.

Now, here is a chart that shows the trend in the 7-day moving average Bitcoin aSOPR over the last several years:

As you can see in the above graph, the 7-day MA Bitcoin aSOPR has taken a deep dive below the 1 mark recently. This means that investors are now selling at some big losses.

The current levels of the indicator are the same as those observed back during the 2018-19 bear market bottom, as well as during the COVID crash.

The reason such deep capitulations have usually coincided with major bottoms in the price of the crypto is that they signify an exhaustion of selling pressure as the weak holders give up and dump their holdings at a loss.

Stronger hands then buy these coins up and accumulate at cheap prices, leading to a more positive outcome in the long term.

If the current capitulation really is the final one, then a bottom may be in sight for Bitcoin. However, bullish trend wouldn’t immediately follow the coin; the short term outcome is likely to still be bearish.

At the time of writing, Bitcoin’s price floats around $16.1k, down 5% in the last week.