Bitcoin [BTC] Short-term Holders Continue to Realize Losses as Their SOPR Drops Below 1

Over the past week, Bitcoin [BTC] has traded within a parallel channel, consolidating between $82,000 and $86,000 without clear direction.

Bitcoin (BTC) has been consolidating in a parallel channel over the past week, with limited progress observed.

As a result, investors who bought Bitcoin at these levels are now recording significant losses, which is also being reflected in crypto derivatives.

According to CryptoQuant, Bitcoin’s Realized Losses have been detected to be currently dominating the market.

Indeed, Bitcoin’s Profit/Loss Ratio (7DMA) has dropped below its critical level of 1. Recent data from CryptoQuant showed that the indicator fell on July 17.

The indicator measures the balance between 7-day rolling realized gains and losses from coins moving out of exchanges. Its recent drop may indicate that the majority of investors are currently realizing losses.

These losses are largely short-term holders who are now selling at a loss. This is evident from the recent drop in Short-term Holder SOPR.

The indicator dropped below the 1.0 level to 0.9 at the time of writing. Its decline suggests that short-term holders, who typically hold coins for less than 150 days, are selling their coins at an average price lower than their purchase price.

Short-term holders are also facing unrealized losses, as Bitbo data showed that their Realized Price stands at $92,174—far above current spot prices, which are trading at the $84,000 level at the time of writing.

However, it is important to note that this does not necessarily signal a full-blown capitulation phase, but rather a phase of doubt or potential accumulation.

Whenever the Profit/Loss Ratio reached the +4 STDV deviation from the 365DMA, a local market top was consistently formed, followed by a short-term correction during the bull phase.

With a high level of uncertainty still prevailing in the crypto markets, there is a better chance that a capitulation phase may unfold, potentially driving realized losses even higher and steeper.

Although unrealized losses are currently being realized, investors have not yet begun to capitulate. If anything, investors are still optimistic and expect Bitcoin prices to move higher in the near term.

This is supported by the recent drop in Bitcoin’s Fund Flow Ratio, which measures the net flow of Bitcoin into and out of exchanges, from 0.13 to 0.06 over four days.

A lower ratio indicates fewer exchange deposits, which could be seen as a sign of retail investors holding onto their coins.

This optimism is also reflected in the behavior of Bitcoin whales, who are known to move large amounts of Bitcoin.

According to CryptoQuant, the exchange whale ratio, which measures the balance of large trades above 50 BTC on exchanges, dropped from 0.51 to 0.37. A lower ratio implies that whales are staying put or, in another possibility, they could be accumulating more coins.

In conclusion, despite the rising unrealized losses, investors have yet to capitulate, and they remain optimistic about Bitcoin’s price outlook.

If this bullish sentiment can be sustained, we could see Bitcoin making a move to reclaim the $86,078 resistance, which is the upper boundary of the consolidation channel.

However, if short-term holders start to sell in a panic to avoid more losses, we could see Bitcoin retracing to the lower boundary of the channel, which is currently at the $82,800 level.