On-chain analytics company Glassnode has highlighted that the Bitcoin price frequently establishes local bottoms when a certain group of holders exhibits capitulation.
Current Mild Loss Realization Among Bitcoin STHs
In a recent post on X, Glassnode discussed how short-term price movements are often influenced by the response of top buyers to post-ATH pullbacks. As the price declines, these holders quickly find themselves at a loss and may be inclined to react impulsively.
Bitcoin is presently in such a situation, with a significant amount of supply having a cost basis situated between the current spot price and $120,000, as illustrated in the chart below.
The graph features the Cost Basis Distribution indicator, which, as its name indicates, reflects how much of the BTC supply last changed hands at different price levels. Data from this metric shows that investors have gradually been accumulating a substantial supply cluster below $120,000 while the asset has lingered in this range since early July.
The recent decline in Bitcoin’s price has left these investors in a difficult position, raising the question: how have they been responding? An indicator that can provide insight is the Spent Output Profit Ratio (SOPR), which compares the profit and loss realized by investors across the network.
A SOPR value greater than 1 indicates that the average holder is selling their coins profitably, while a value below this threshold suggests a predominance of loss-taking on the network.
In this analysis, the focus is not on the overall market SOPR, but specifically on a subset: the top buyers who entered the cryptocurrency in the last three months.
Here is the chart shared by Glassnode that displays the Bitcoin SOPR trend for these investor cohorts:
The chart reveals that the Bitcoin SOPR has declined across all three groups categorized by timeframes: 1 day to 1 week, 1 week to 1 month, and 1 month to 3 months, following the price drop.
The indicator now hovers between 0.96 and 1.01 for these cohorts, suggesting that these investors have begun selling at slight losses. “If pressure builds, local bottoms often form when this group capitulates, typically when SOPR slips below ~0.9,” Glassnode notes.
Currently, however, it appears that Bitcoin may not need to await this capitulation signal, as its price has rebounded over the past day.
BTC Price
As of this writing, Bitcoin is trading at approximately $116,000, reflecting a 2% decline over the past week.
