Final Capitulation Phase May Be Here

Long-term holders are the least reactive to short-term price swings, so their decision to sell at a loss is seen as fear spreading widely.

Data shared by on-chain analyst Crypto Dan shows that Bitcoin (BTC) long-term holders are selling at a loss.

According to him, it means that the market may be approaching a phase where selling pressure gets exhausted, which could signal that a major cycle low is about to be reached.

What the Data is Telling Us

Crypto Dan wrote in a market update on March 31 that a widely followed metric, the Long-Term Holder Spent Output Profit Ratio (LTH-SOPR), which measures whether Bitcoin sold by those who’ve held the asset for longer than 155 days is being moved at a profit or loss, has fallen below 1.0. A reading above 1.0 usually means that holders are realizing gains, while a number below 1.0 signals a loss.

The analyst also pointed out that when LTH-SOPR drops below 1.0, it usually carries more weight than short-term holders selling. This is because long-term holders are considered the least reactive to temporary price swings. Therefore, their decision to sell at a loss typically implies that fear has become widespread.

According to the market watcher, when long-term holders start suffering losses, it means their short-term counterparts have already exited or absorbed heavy damage, and at that point, most market participants are operating in the red.

In the past, such conditions produced what Crypto Dan called “the final stage of fear” before selling pressure slowly burns itself out, leading to market bottoms or at least zones close to long-term lows. While he stopped short of calling the current moment the absolute bottom, he characterized it as the type of environment where opportunity tends to follow fear.

There has also been a notable shift happening among large players that’s been observed by analyst Darkfost. As per their assessment, whale selling on Binance has cooled off quite significantly after a period of heavy distribution.

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When BTC approached $60,000 earlier in the year, whales became very active on the exchange, with their deposits hitting a high on February 4, when they sent more than 11,000 BTC to Binance in just one day. This pushed the 30-day moving average of daily Bitcoin inflows from 1,000 BTC to nearly 4,000 BTC by the end of that month.

However, that average has since dropped back to 1,600 BTC per day, a situation Darkfost explained as large players adopting a “wait-and-see” approach instead of going on with their offloading.

Where Analysts See This Going

The capitulation data is not isolated to on-chain data, with chartist Ali Martinez yesterday identifying a recurring technical signal tied to Bitcoin’s 50-day and 200-day SMA crossover on the 3-day chart. He said that such patterns appeared near cycle bottoms in 2014, 2018, and 2022.

In this cycle, the crossover occurred on February 27, and based on drops of between 40% and 50% that came right before the three bottoms he spoke about, Martinez thinks there could be potential accumulation zones around $40,000, with a deeper washout scenario even pushing BTC near $30,000.

Meanwhile, using legacy valuation models, including the CVDD Floor, which is currently close to the $45,500 level, fellow analyst Willy Woo estimated the bottom could be between $46,000 and $54,000. On their part, Doctor Profit put the likely floor range between $35,000 and $45,000 to continue the theme. However, the trader also noted that it was possible for BTC to ride a short-term upside toward the $79,000 to $84,000 region before the final dip.