Bitcoin Long-Term Holders’ Profitability Collapses to 2018 Bear Market Levels

Transactions carried out by Bitcoin long-term holders (LTHs), a cohort of BTC investors that have held coins for over 155 days, is beginning to signal that a price recovery for the benchmark crypto may be in the offing.

Per data from blockchain data analytics and intelligence platform Glassnode, the spent output profit ratio (SOPR) of Bitcoin LTHs has collapsed to less than 0.6. The level of the metric which measures the profitability of LTHs was last seen in the depths of the December 2018 bear market.

At the current LTH-SOPR level, the cohort of investors is selling their BTC holdings at an average 42% loss. These coins being spent have a cost basis of around $32,000, Glassnode noted.

Historically, this strain on Bitcoin LTHs has usually signalled macro price bottoms that ended multi-year bear markets. One reason this is the case with the metric is that LTHs are often considered majorly experienced smart money investors who do not react quickly to short-term volatility.

Similarly, the cohort usually only spends their coins at significant profit or loss based on conviction to mark a significant change in sentiment.

“Macro bottoms have historically been established where LTHs are realizing significant losses with LTH-SOPR reaching 0.6 and below (losses of 40% or more),” Glassnode noted in a metric description.

Analysts have expected Bitcoin price recovery

Beyond expecting a price bottom to have been reached as the Bitcoin market oscillates between a low of $18,000 and a high of $20,000, market participants have also been anticipating a price recovery to kick in soon.

According to Bloomberg Intelligence’s senior commodity strategist Mike McGlone, Bitcoin’s relationship with commodities could indicate that the benchmark crypto is poised for a “potential resumption of the elongated upward trajectory.”

“The lowest-ever crypto volatility vs. the Bloomberg Commodity Index (BCOM) may portend a resumption of Bitcoin’s propensity to outperform. Our graphic showing the elongated upward trajectory of the crypto’s price vs. the BCOM is typical compared with most assets,” – McGlone.

On the day, Bitcoin is trading at around $19,145, up 0.94% at the time of writing per data from TradingView. However, the current price is still about a 72% drawdown from its all-time high price of just under $69,000 in November 2021.