Anika Begay
On-chain data shows that Bitcoin HODLers are still able to sell at a profit, while weak hands are experiencing a major capitulation event.
Bitcoin Diamond Hands Continue to Sell Comfortably at a Profit
As CryptoQuant’s head of research Julio Moreno points out in a new post on X, short-term BTC holders have been falling short during this latest market downturn.
“Short-term holders” (STH) make up one of the two main divisions of the Bitcoin user base based on holding time, while the other group is called “long-term holders” (LTH).
The limit between the two groups is 155 days: investors who have held shares for less than this period fall into the STH, while those with a longer period fall into the LTH.
Statistically, the longer an investor holds their coins, the less likely they are to sell or transfer them at any time. As such, STHs represent the weak side of the market, while LTHs include HODLers.
During the last crash, both of these cohorts showed a reaction, but this reaction was very different between the two. To show this difference, Moreno used the indicator “Spent Output Profit Ratio” (SOPR).
SOPR basically tells us whether a given group is selling Bitcoin at a profit or a loss at this time. A metric value above 1 implies that the group members are making profits, while a value below 1 suggests that the dominant selling pattern is losses.
Here is a chart showing the recent trend of Bitcoin SOPR for the STH and LTH cohorts:
The difference between the behavior of the STHs and LTHs | Source: @jjcmoreno on X
As shown in the chart, Bitcoin STH SOPR has mostly been hovering below 1 during the latest price drop, implying that these investors sold at a loss.
At worst, the indicator had even dropped below the 0.8 level, suggesting that the cohort had suffered a loss of more than 20%. Clearly, these fickle hands were thrown into a panic by the collapse.
While STHs have capitulated, LTHs are still participating in net profit taking, as the SOPR for them has remained strong above the 1 level. The indicator even reached a notable level during the bounce BTC saw after its lows, suggesting that these diamond hands were sold for significant gains.
Some STHs had also managed to make profits in this recovery, but as can be seen in the chart, the parameter had only slightly exceeded the value of 1 and even then only for a short time, which means that the profit realization had not been significant and had lasted only for a moment.
BTC Price
At the time of writing, Bitcoin is trading around $55,000, down more than 17% from last week.
Looks like the price of the coin has been sliding down recently | Source: BTCUSD on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
