STH Panic Emerges as Bitcoin Crashes To $81K: Realized P/L Turns Negative For The First Time This Cycle
Overview
Bitcoin has experienced a significant decline, dropping from the $85,000 level to $81,000, marking its lowest point since early spring. This downturn has led to heightened panic among traders, with many speculating about the potential for a bear market.
Current Market Conditions
The recent price drop indicates a clear loss of control among bullish traders, as market sentiment shifts from caution to panic. Analysts are observing a critical change in the behavior of short-term holders (STHs). For the first time this cycle, the Realized Profit/Loss (P/L) metric has turned negative, showing that a substantial number of recent buyers are realizing losses. This development signals increasing capitulation among STHs, which historically tends to amplify selling pressure in the spot market.
Despite the severity of the sell-off, some analysts suggest that the current conditions may mirror past market manipulations, where significant corrections ultimately laid the groundwork for sharp rebounds.
STH Panic and Historical Context
The spike in panic among short-term holders is not a new phenomenon; it mirrors patterns observed during previous market bottoms. Historical data shows that similar increases in STH loss realization occurred in July 2021 and during the 2022–2023 bear market. Each of these instances led to accelerated selling and liquidity stress, characterized by fear-driven capitulation.
The current market situation reflects this familiar structure, with the STH Realized P/L declining sharply and the STH-MVRV ratio falling below 1. This indicates that many recent investors are now in a position of loss, leading to panic selling. Analysts note that forced selling typically clusters towards the end of market corrections, suggesting a potential stabilization phase may follow once STHs capitulate.
Bitcoin’s Technical Analysis
Bitcoin is currently in a steep downtrend, with its price hovering around the $83K–$84K range. This decline is one of the most significant seen in this cycle, particularly after breaking through critical support levels at $92K and $90K. The price movement suggests capitulation-driven selling, as BTC trades well below the 50-day, 100-day, and 200-day moving averages, all of which are now exhibiting a bearish alignment.
Currently, Bitcoin is attempting to find support near the 200-day moving average. A clean close below this level could lead to further declines. Volume has surged in recent sessions, indicating panic selling, particularly from short-term holders and larger entities. However, early signs of selling exhaustion are appearing, as evidenced by long lower wicks on candles and increased intraday volatility.
Impact on the Crypto Market
- The market is experiencing heightened fear and panic, which could lead to further volatility.
- The negative Realized P/L for STHs indicates increased capitulation, potentially leading to deeper price corrections.
- Historical patterns suggest that such panic could be a precursor to stabilization and eventual recovery.
- Increased selling volume and volatility may signal a shift in market dynamics, influencing future price movements.
- The current technical indicators suggest that Bitcoin is testing critical support levels, which could determine the market’s direction in the near term.
Updated: 11/21/2025, 8:26:58 PM
