[Analysis] "Bitcoin enters capitulation zone for long-term holders…Whether SOPR recovers 1.0 is the inflection point"

An analysis suggests that capitulation by long-term holders (LTH) in the Bitcoin (BTC) market has triggered an on-chain signal indicating entry into a “fear zone.”

On the 22nd (local time), CryptoQuant contributor The Enigma Trader said, “As of March 11, long-term holder SOPR (Spent Output Profit Ratio) fell to 0.64,” adding, “This means selling occurred at about a 36% loss versus the average purchase price, and it is one of the strongest capitulation signals in recent months.”

A period in which SOPR falls well below 1.0 is typically a phase where even conviction-driven long-term investors exit the market while absorbing losses, indicating that genuine fear is being reflected across the market.

While a partial rebound followed, as of March 22 LTH-SOPR still remains around 0.88. This suggests stop-loss selling is continuing even as market participants have yet to recover their average cost basis.

However, on-chain flows also show mixed moves. Over the past 30 days, roughly 88,400 BTC has been withdrawn from exchanges, indicating continued accumulation, while in the futures market negative funding rates have persisted for seven consecutive days, keeping short positions in the lead. This implies that another investor cohort has absorbed the long-term holders’ mid-March selling and moved the coins off exchanges. The market is interpreting this as an “early-stage regime shift” in which selling and accumulation are unfolding simultaneously.

The contributor pointed to whether LTH-SOPR can reclaim 1.0 as the key variable. “Looking at past cases, the phase in which the indicator breaks back above 1.0 after large-scale capitulation has often marked the starting point of a strong uptrend,” he said. Accordingly, if exchange-withdrawal flows persist and LTH-SOPR clearly recovers 1.0, the analysis argues there is a high likelihood that the on-chain view could flip to a bullish signal.