Bitcoin HODLers Still Profiting Amid Market Turbulence
An analysis conducted by CryptoQuant’s Head of Research Julio Moreno points out that the short-term holders (STHs) of Bitcoin have experienced a capitulation event in the face of the recent market downturn. This group is distinguished from the long-term holders (LTHs) based on the duration for which they have held their holdings.
The division between STHs and LTHs is drawn at 155 days, with investors holding for less than this duration falling into the former category, while those holding for longer are classified as LTHs. Generally, the longer an investor holds onto their coins, the less likely they are to sell or transfer them, indicating a stronger psychological commitment to their investment.
- STHs represent short-term, weak-handed participants in the market.
- LTHs, on the other hand, include more resilient HODLers.
Behavioral Contrasts Between Short-Term and Long-Term Holders
During the recent market crash, both STHs and LTHs have reacted differently to the adversity, as revealed by the Spent Output Profit Ratio (SOPR) indicator used by Moreno. This metric highlights whether a particular group is selling Bitcoin at a profit or a loss at the current moment.
When the SOPR is above 1, it indicates that group members are realizing profits, while a reading below 1 suggests that most transactions are resulting in losses.
- STH SOPR levels have predominantly remained below 1 during the recent price decline, indicating that these holders have been selling at a loss.
- At its lowest point, the SOPR even dropped below 0.8, indicating significant losses exceeding 20% for this group.
- LTHs, on the other hand, have maintained a strong SOPR above 1, signaling consistent profit-taking behavior even during market turmoil.
Profit Realization Trends Among STHs and LTHs
While both groups managed to take profits during the market rebound, the extent and duration of profit realization vary significantly:
- LTHs have continued to profitably offload their holdings, reflected by a sustained SOPR above 1 even during the recovery phase.
- Some STHs were able to capitalize on the rebound as well, briefly breaching the 1 mark on the SOPR; however, their profit margins were limited and short-lived.
Bitcoin Price Movements
As of now, Bitcoin is trading at approximately $55,000, marking a decline of more than 17% over the past week.
Hot Take: Bitcoin HODLers Still Able to Profit Amid Market Uncertainty
On-chain data shows Bitcoin HODLers are still able to sell at a profit while the weak hands are going through a major capitulation event.
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