Bitcoin (BTC) price below $20,000 is undergoing a new “capitulation” event spanning an entire year of buyers, research reveals.
In one of its Quicktake market updates on September 29, on-chain analytics platform CryptoQuant noted intense selling by a large number of recent hodlers.
2021 Bull Market Coins ‘Have Been Aggressively Sold’
As the BTC/USD pair remains near levels not seen since 2020, it’s not just miners who are feeling the pinch.
Analyzing the Spent Exit Age Bands (SOABs) of Bitcoin exchange inflows, CryptoQuant contributor Edris showed that those who bought between April 2021 and April 2022 have been selling coins en masse – for less than they expected. they bought them
“Looking at the chart, it is clear that coins between 6 and 18 months old have been selling aggressively recently,” he concluded.
“These coins have been bought between April 2021 and April 2022 at prices above $30,000. This signal means that many holders who have entered the market during the 2021 bull market and above the $30,000 mark, have recently capitulated and exited the market at an approximate 50% loss.”
These types of events should not be taken as likely, as they usually occur at the bottom of bear markets. The only question is whether the recent $17,600 June macro bottom will be the bottom of this one.
“These types of capitulations usually occur during the final months of a bear market, which points to the formation of a possible bottom in the near future.”
Earning Warnings Meet Earning Potential
Investigating Bitcoin’s Spent Output Profit Ratio (SOPR) metric, meanwhile, fellow CryptoQuant contributor Caue Oliveira highlighted another historical bear market trend repeating itself.
The SOPR divides the price paid for an amount of BTC by the price at which it is sold. The resulting figure fluctuates around 1, with lower values indicating a bear market as investors reluctantly take net losses.
According to data from on-chain analytics firm Glassnode, as of September 29, the entity-adjusted SOPR was slightly above 0.95.
The metric is trending back towards 1, after bottoming out in June, suggesting that the best buying opportunity may have already arrived.
“If we look at the long-term incumbent chain spending pattern, measured through the Spent Output Profit Ratio… we can find the biggest loss-making outlets,” Oliveira wrote.
“Historically these points have been the best risk-adjusted entries in the last two bear market bottoms.”
Looking ahead, a “maximum pressure point” looms for long-term holders (LTH), he added, referring to selling pressure that eases as SOPR rises.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.