Bitcoin's Long-Term Holders Face Challenges Post-February Sell-Off
The Bottom Line:
Bitcoin's long-term holders are under pressure after the February sell-off, with signs of weaker accumulation compared to past crashes. A key metric has flipped, indicating potential losses for veteran investors. However, catalysts like the CLARITY Act, more Fed rate cuts, and sustained ETF inflows could trigger a recovery.
The Squeeze:
The February 6 dip to $62,800 put significant pressure on long-term holders, similar to the 2022 LUNA crash. This marks a rare shift in conviction, typically seen in deeper bear market stages. Glassnode notes this on Telegram (https://t.me/glassnode/1544).
The 7-day exponential moving average of the Long-Term Holder Spent Output Profit Ratio (SOPR) falling below 1 suggests investors are realizing losses. These long-term holders are usually the market's strongest hands, forming cycle bottoms during capitulations.
The Question Mark:
With long-term holders underwater, the question arises: where's the next support level? Glassnode points to $54,000 as critical. However, recent macro data hasn't offered clarity.
The U.S. strong job growth in January (https://decrypt.co/357789/bitcoin-slides-fed-rate-cut-doubts-strong-jobs-report) dampened rate cut expectations, and Bitcoin didn't recover despite slower inflation (2.4%).
Markets still predict a 90% chance the Federal Funds Rate stays unchanged in March (https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html).
The Contrarian View:
Not everyone agrees the floor will break. Sean McNulty, FalconX's APAC derivatives trading lead, argues $60,000 will hold as the near-term cycle floor. He cites "healthy buying flows" and the absence of a systemic blow-up like FTX as reasons for his optimism.
McNulty believes the recent drawdown was "orderly deleveraging" without structural failure, making further decline unlikely.
