A significant portion of Bitcoin’s circulating supply is currently in the red, with nearly one-third of holdings now experiencing losses. This marks a level last seen in September 2024 and could have implications for future price movement. Data indicates that while this may seem alarming, historical precedents suggest such phases often coincide with seller exhaustion rather than a market breakdown.
Onchain metrics reveal rising short-term loss activity but overall moderate selling pressure. This is reflected in the 7-day short-term holder Spent Output Profit Ratio (SOPR), currently at 0.9904. Readings below 1.0 suggest that most coins are being sold at a loss, indicating growing pressure from short-term traders.
To further understand this dynamic, historical patterns show similar phases have often coincided with seller exhaustion and price resets. However, if selling pressure continues to intensify, long-term holders may begin taking profits to safeguard their gains, while newer investors might sell once they recover their costs. This could cap rebounds.
However, if fear subsides and selling pressure fades, these very conditions could help form a durable bottom and reset sentiment for the next accumulation phase.
While technical indicators suggest Bitcoin’s market structure is oversold, historical patterns indicate that recovery often follows consolidation rather than an immediate reversal. If prices stabilize in the near term, this may create momentum for a rebound. A significant buildup of short positions in futures markets could also provide fuel for a rebound.
It remains to be seen whether Bitcoin will experience a sustained price rally. Technical analysis suggests that a potential consolidation between $98,000 and $103,000 could form the foundation for a gradual rebound by year-end.
*This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.*