Bitcoin LTH SOPR Indicates Concerning Capitulation Levels — What Does This Mean For Price?

Prominent market analyst with the pseudonym RugaResearch has drawn attention to recent developments with Bitcoin long-term holders (LTH) Spent Output Ratio (SOPR), indicating that these key participants are exiting their positions at a significant loss.

The SOPR compares the price at which coins were last moved (cost basis) to the price at which they are currently being spent. It is used to measure whether coins being spent are in profit or loss. When the SOPR drops below 1, it indicates investors are selling their holdings at a loss and vice versa.

Since March 11, RugaResearch reports that Bitcoin LTH SOPR has dipped below the 0.80 mark on seven different occasions to date, suggesting the long-term holders have steadily produced capitulations over the last month. Some of these occasions include 0.639 on March 11, 0.723 on March 28, 0.681 on March 30, and recently 0.753 on April 3. This suggests that Bitcoin long-term holders are presently realizing losses equal to 25% of their cost basis.

When compared with the short-term holders (STH) SOPR of 0.996, RugaResearch also highlights a developing market divergence drawing little to no attention from investors. These figures, combined with the SOPR Ratio of 0.757, suggest that short-term holders are barely making losses, while the diamond hands are deep underwater, a situation in total contrast to a typical market structure where LTH are expected to realize their assets at a profit. However, it’s worth noting that a substantial portion of this distribution is going to exchanges, which have now recorded a net positive period over the last month.

According to the renowned market analyst, while an LTH SOPR significantly below 1 could indicate a severe lack of conviction, this on-chain development also served as a forerunner of major structural market shifts. RugaResearch explains that the implication of the frequency of negative SOPR is less about the current losses and their eventual results, which could be either deeper losses or the formation of a price floor.

At press time, Bitcoin exchanges hands at $67,390 following a 0.79% gain in the last 24 hours. However, daily trading volume is down by 30.57% and valued at $15.95 billion. This sharp decline in transaction activity suggests the recent minor gains are speculation-driven.

According to additional data from CoinCodex, the market sentiment remains strongly bearish, with the Fear & Greed Index at 11, suggesting extreme fear among investors. Nevertheless, CoinoCodex analysts foresee a rebound to $72,284 in the next month in line with the range-bound movement observed since early February.