Bitcoin Short-Term Holders Deep In Loss: MVRV Signals Capitulation Phase

Overview

Bitcoin is currently facing significant selling pressure, struggling to maintain the $70,000 level. The market sentiment is fragile, with short-term holders experiencing substantial losses, leading analysts to raise concerns about a potential capitulation phase.

Current Market Conditions

Bitcoin’s price action has shown a notable inability to reclaim higher resistance zones following a period of volatility. As selling pressure continues, short-term investors are absorbing losses rather than aggressively accumulating Bitcoin. This behavior indicates a lack of confidence among market participants, which could have implications for the overall market trajectory.

According to a report by analyst Axel Adler, there is increasing stress among short-term holders. The Bitcoin Short-Term Holders SOPR (Spent Output Profit Ratio) indicator reveals that many investors are realizing losses, with this group sitting approximately 25% below their average acquisition cost. The SOPR metric, which assesses the relationship between the selling price and purchase price, has fallen to 0.949, while the 7-day average is close to 0.97. Values below 1.0 highlight that coins are being sold at a loss, suggesting that forced liquidations or reactive selling behaviors are occurring. This indicator has remained below the critical threshold since mid-January, indicating sustained market pressure rather than a transient correction.

Historically, prolonged weakness in the SOPR metric, coupled with price stabilization, can indicate seller exhaustion; however, a move back above 1.0 is necessary to confirm any shift in market dynamics. Until such a move occurs, further downside risks cannot be dismissed.

Short-Term Holder MVRV Analysis

The Bitcoin Short-Term Holder MVRV (Market Value to Realized Value) indicator further illustrates the challenges faced by recent market participants. This metric compares the current market price to the average acquisition price of short-term holders, highlighting unrealized profitability. When the MVRV drops below 1.0, it indicates that this group is, on average, holding positions at a loss.

Recent data shows the STH MVRV has sharply declined to around 0.752, with the cohort’s realized price at approximately $95,400. With Bitcoin trading near $71,700, this cohort is around 25% underwater, marking the widest gap between market price and their cost basis observed in this cycle. Historically, MVRV readings near or below the 0.8 level have often coincided with accumulation phases or local market bottoms.

However, such signals alone are insufficient for confirmation. Price stabilization and a recovery in SOPR above 1.0 are crucial indicators that forced selling has eased. As of now, the data suggests that fragility persists, despite signs of capitulation among short-term holders.

Market Structure and Support Levels

Bitcoin’s weekly structure has deteriorated, particularly after breaking below the mid-range support near the $75,000 area. The latest price movements indicate strong downside momentum, pushing Bitcoin closer to the $70,000 zone while trading well below the 50-week moving average. Historically, sustained trading under this average often aligns with corrective or transitional bear phases rather than bullish continuation.

The 100-week moving average has shifted from a support level to resistance, currently positioned just above $80,000. Meanwhile, the 200-week average trends upward near the $55,000–$60,000 region, serving as a deeper macro support band in the event that selling pressure continues.

Volume expansion during this decline suggests active distribution rather than a low-liquidity drift. However, capitulation phases may exhibit similar volume characteristics, making it essential to monitor whether follow-through selling continues or begins to fade. Bitcoin now faces a critical test; maintaining levels above the $68,000–$70,000 range could allow for consolidation before a recovery attempt. Conversely, failure to stabilize at these levels increases the likelihood of a deeper retracement toward longer-term moving average support.

From author

The current situation in the Bitcoin market underscores the challenges faced by short-term holders. The decline in key indicators such as SOPR and MVRV suggests not only significant unrealized losses but also a broader market sentiment that remains cautious. The struggle to reclaim higher resistance zones adds to the uncertainty, and the market will need to see decisive actions to shift toward a more stable environment.

Impact on the crypto market

• Short-term holders are realizing losses, indicating a lack of confidence among recent market participants.
• The SOPR indicator remains below 1.0, signaling ongoing selling pressure.
• The MVRV metric suggests that short-term holders are significantly underwater, highlighting potential capitulation.
• Bitcoin’s break below key support levels raises concerns about further downside risks.
• The market requires stabilization above critical price levels to regain bullish sentiment.
• Continued selling pressure may lead to deeper retracements toward longer-term support levels.