- Bitcoin lost over 6.88% of its over the last 24 hours
- Short-term holders are aggressively exiting the market as losses mount
Short-term holders under pressure
As the market crashed over the last 48 hours, Bitcoin [BTC] saw a sharp decline on the charts and hit a 5-month low of $74k. Since breaking the key psychological level of $80k, short-term holders have been left in extreme panic.
In moments of heightened volatility, Short-Term Holders (STH) are often the first to react. And usually, they tend to exit the market to minimize losses.
Often, such behavior is effectively captured by the STH-SOPR. When the STH-SOPR falls below 1.0, it means that short-term investors are realizing losses – A classic signal of capitulation.
Historically, a major price correction has accompanied a sharp drop in the STH-SOPR. For instance, in 2024, the STH-SOPR fell below the -2 standard deviation band which was followed by panic selling among STHs.
Source: CryptoQuant
At the time of writing, the STH-SOPR declined below 1 to hit 0.98, according to CryptoQuant. This suggested that with the price drop, short-term holders have entered full capitulation mode.
It would seem that STHs are currently aggressively exiting the market. This also means that recent buyers have entered loss territory and are closing their positions to cut losses. Such a set-up positions Bitcoin for a potential downside on the charts.
Is the worst yet to come?
According to AMBCrypto’s analysis, Bitcoin has been noting significant bearish sentiments across market participants.
Source: CryptoQuant
In fact, there’s been significant selling activity from short-term holders, both retailers and whales.
For starters, Bitcoin has seen three consecutive days of positive exchange netflows. When netflows hold within positive territory for a period of time, it means that markets are filled with more sellers. Accordingly, there have been more inflows into exchanges than outflows, implying more selling than accumulation.
Source: IntoTheBlock
With selling aggressively in the market, even whales have turned to sell.
In fact, large holders’ netflow to exchange netflow ratio spiked to 0.53% over the last 24 hours. This spike seemed to suggest that whales are sending more Bitcoin into exchanges. What this means is that whales are currently selling. When whales turn to sell, it signals a lack of market confidence among large entities.
Source: CryptoQuant
Sustained selling activity across all market participants has resulted in a higher Bitcoin supply. We can see the rising supply as the stock-to-flow ratio spiked over the past day from 35.2k to 43.8k BTC. When supply rises while demand remains low, the price tends to decline.
With selling pressure spiking while supply also rises, Bitcoin risks further downside. Therefore, we could see BTC drop some more if the current market conditions persist. A continuation of the bearish trend will see BTC dip to $71,858.
For a bullish reversal, Bitcoin must reclaim the psychological level around $80k.
