Market Stress Continues As Bitcoin STH SOPR Dips Below 1– When Will The Pain End?

Overview

Bitcoin is currently facing significant market stress, struggling to maintain its position below the $90,000 mark. This ongoing difficulty indicates a broader trend of uncertainty and caution among traders, particularly among short-term holders, as they react to declining price levels and overall market sentiment.

Market Conditions and Indicators

Bitcoin’s price action has shown signs of weakness, with a notable failure to reclaim key resistance levels. Currently, Bitcoin has retraced approximately 30% from its all-time high, placing it firmly in a corrective phase characterized by a lack of momentum. This price drop has led to heightened concern among market participants, as evident from recent on-chain data.

According to a report by Axel Adler, two critical indicators—the Short-Term Holder Spent Output Profit Ratio (STH SOPR) and the Profit/Loss (P/L) Block—indicate a broader loss realization among traders. The STH SOPR measures whether coins held for less than 155 days are being sold at a profit or a loss. A reading below one suggests that recent buyers are realizing losses, and the current 7-day moving average of STH SOPR is near 0.99. This indicates that, on average, short-term holders are selling Bitcoin below their acquisition price, a sign of increased market stress and emotional selling behavior.

Historically, periods when the STH SOPR has dipped into this red zone have marked local capitulation phases, where selling pressure peaks, leading to weaker hands exiting the market. The current situation signals that as long as the STH SOPR remains below one, short-term holders will remain in a state of stress.

The P/L Block indicator complements this analysis by tracking the aggregated profit and loss state of market participants. Presently, the P/L Block reflects a dominant loss state, indicated by a P/L Score of minus three, which is classified as pronounced stress. Both indicators reinforce the narrative of capitulation among short-term holders, further emphasizing the fragile state of Bitcoin’s market.

Price Analysis

Examining the weekly chart reveals that Bitcoin is trading around the $89,900 level, having faced a sharp rejection from the $120,000–$125,000 region. The price has retraced significantly but is attempting to stabilize above the rising 200-week moving average, historically a critical support level for long-term trends. This area is currently acting as dynamic support, suggesting some buyer defense despite the overall market weakness.

However, Bitcoin’s position below the 50-week moving average indicates a loss of medium-term momentum, confirming that the market remains in a corrective phase rather than a resumption of an uptrend. The 100-week moving average continues to rise well below the current price, highlighting the excess built during the previous rally.

Volume has declined during this consolidation phase, indicating indecision rather than aggressive accumulation, which typically precedes a volatility expansion. Maintaining support above the $85,000–$88,000 zone is crucial, as a sustained breakdown below the 200-week moving average could lead to a deeper retracement.

From author

The current state of Bitcoin reflects a complex interplay of market dynamics, with significant implications for both short-term holders and the broader crypto market. As indicators like the STH SOPR and P/L Block signal capitulation, it is evident that the sentiment among traders is cautious. The struggle to reclaim key resistance levels adds to the uncertainty, making future price movements difficult to predict.

Impact on the crypto market

• Bitcoin’s ongoing struggles may lead to increased volatility in the broader cryptocurrency market.
• Short-term holders’ capitulation could result in further selling pressure, impacting overall market sentiment.
• The indicators suggest that market participants are currently in a state of stress, which could hinder recovery attempts.
• The failure to reclaim key resistance levels may deter new investors from entering the market.
• A breakdown below critical support levels could signal deeper retracements, affecting altcoins and other digital assets.
• Conversely, a stabilization above key moving averages could provide a foundation for potential recovery.