Bitcoin is consolidating around $78,400 as long-term holders start selling at a loss, pushing an on-chain profitability ratio below 1.0. CryptoQuant analyst 'Crypto Dan' says the same pattern has preceded every major market bottom in past cycles, though confirmation still requires the ratio to climb back above 1.0.
Long-term holders start selling at a loss
Bitcoin's consolidation around $78,400 has trapped market participants in a state of uncertainty. After a prolonged correction from previous highs, investors who had held their coins for years began to lose their nerve, and some of the market's steadiest holders are now booking losses.
According to Crypto Dan from CryptoQuant, even the most resilient large investors have begun selling Bitcoin at a loss en masse amid a critical decline in public interest in the industry. The signal centers on the SOPR Ratio, an on-chain indicator that measures the profitability of long-term holders relative to short-term holders, which has fallen below the psychological threshold of 1.0. A drop in the ratio below one means old money is now realizing deeper losses relative to its purchase price than recent buyers.
Why capitulation can mark a bottom
In previous market cycles, a drop in this metric below the signal line has always marked the final stage of clearing speculators from the market and the formation of a global macro bottom. Analysts point to two reasons this phase tends to coincide with a bottom.
First, the market has been fully cleared of casual participants, and panic selling among retail traders has stopped, removing additional pressure on the price. Second, while short-term participants dispose of their assets during local price swings, large addresses quietly absorb the available supply at relatively low prices during the capitulation phase.
Such a combination of factors, panic among market veterans alongside indifference from the broader crowd, comes around only once every few years, according to the analysis. Still, analysts urge investors to wait for confirmation: the SOPR Ratio must not simply find a bottom but return above 1.0 and remain there consistently for the trend to be decisively broken.
Source: U.Today
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