Long-term Bitcoin Holders Start Accepting Loss

Bitcoin (BTC) just closed the weekly, monthly, and quarterly candles below $20,000. Long-term holders are showing signs of accepting losses. If you compare BTC price history by month, last June was the month with a decrease of 38%! There were very few months like that in the past.

There has not been a month in which BTC has maintained such a deep decline in the past 10 years. This decline is more than that of November 2018 (-37%) and is on par with the decline of September 2011.

But it is very unfair to compare with 2011, because at that time the market cap was small, so the large range is understandable. But with a market capitalization of hundreds of times, as it is now and still falling so deeply, it is difficult to recover soon.

Buy Bitcoin, hold it for about 2 years, and you will be profitable before and after. This is starting to stop being true in the near future.

The standard for the LTH-SOPR on-chain indicator is that holders need to hold Bitcoin for more than 155 days (from about 6 months or more).

• This metric is the ratio of the BTC price (in USD) at the time of spending (after at least 155 days) to the price at the time of UTXO creation. That is why a ratio less than 1 indicates that holders are selling at a loss.
• The chart above shows that in the past 10 years, there were only 4 periods when this ratio was less than 1 (including the current period). Each such phase lasts about 4-5 months.

The past shows that every time the LTH-SOPR is below 1, there is a high probability that BTC is close to bottoming. But there is no basis to know in a period of 4-5 months when this index is below 1, the price will decrease by how much more percent.

To better understand the number of long-term BTC Holders that are selling at a loss, where they have bought BTC mainly, we can refer to another on-chain indicator. It’s Realized Price – UTXO Age Bands.

It is difficult to know exactly what prices are popular with buyers over the past two years. But the Realized price is probably reflective, as it is seen as the BTC price at the time of the last spending.

The chart above shows that holders from 6 to 12 months buy BTC in the $51,000 region. Holders from 1 to 1.5 years buy BTC at $47,000. And the price of BTC is falling close to what 2-year-old holders can buy, or $17,500.

This downtrend continues, which will make the advice of “holding Bitcoin for 2 years will make a profit” no longer true.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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