Bitcoin’s Long-Term Holders Are Cracking—But Is This the Bottom?
Bitcoin’s most loyal investors, often referred to as long-term holders, are showing signs of strain following February’s market sell-off. But here’s where it gets controversial: while their accumulation during this dip appears weaker compared to previous crashes like FTX and LUNA, a critical metric has flipped for the first time since May 2022, suggesting these seasoned holders are now realizing losses. Could this be the tipping point for a deeper correction, or is the market simply resetting for the next rally?
In a recent Telegram note, Glassnode highlighted that the February 6th dip to $62,800 placed significant pressure on long-term holders, mirroring the stress seen during the LUNA crash. This shift in conviction is typically associated with the later stages of bear markets, raising questions about where Bitcoin’s next support level lies. Glassnode points to $54,000 as a potential floor, but not everyone agrees.
And this is the part most people miss: the 7-day exponential moving average of the Long-Term Holder Spent Output Profit Ratio (SOPR) has fallen below 1, indicating that even the most steadfast investors are now selling at a loss. Historically, long-term holders have been the market’s last line of defense, often forming cycle bottoms as weaker hands capitulate. But with these holders now underwater, the question remains: who will step in to stabilize the market?
Macroeconomic factors aren’t providing much clarity either. January’s U.S. jobs report added 130,000 positions, tempering hopes for a Federal Reserve rate cut and pushing risk assets lower. Meanwhile, inflation slowed to 2.4%, yet Bitcoin failed to rally in response. Markets are pricing in a 90% chance that the Federal Funds Rate will remain unchanged in March, according to CME’s FedWatch tool. So, where does that leave Bitcoin?
Sean McNulty, APAC derivatives trading lead at FalconX, offers a contrarian view. He argues that $60,000 will hold as the near-term cycle floor, citing “healthy buying flows” and a “massive wall of buyers” who absorbed the recent capitulation of short-term holders. McNulty believes extreme market pessimism during the drop, coupled with the absence of a systemic blow-up like FTX, makes a further decline unlikely. He describes the recent drawdown as “orderly deleveraging,” with speculative capital rotating out of crypto without triggering structural failure.
But here’s the million-dollar question: Are long-term holders truly capitulating, or is this just a temporary setback? Could catalysts like the CLARITY Act, further Fed rate cuts, or sustained ETF inflows spark a recovery? And if $60,000 doesn’t hold, what’s the next logical support level? Share your thoughts in the comments—this debate is far from over.
