Bitcoin Short-Term Turnover Falls to Historic Lows, Signaling a Possible Bottom

Short-term Bitcoin trading activity has slowed to near historic lows, raising the possibility that the token is trading near a bottom as speculative capital turns over less frequently and more supply shifts into long-term holdings.

BlockBeats reported on May 26 that analyst Murphy said the Bitcoin market appears to be nearing a bottom based on an on-chain indicator known as "short-term capital on-chain activity weight."

The indicator measures the share of dollar-denominated value associated with turnover in short-term holdings. It is used to track how active short-term trading behavior has been, including speculative trades, arbitrage, profit-taking and panic selling.

Murphy said the gauge has fallen to an extremely low level by historical standards. Over the past 15 years, readings this low have mostly appeared near bear-market troughs.

That suggests short-term turnover in the Bitcoin market has cooled sharply and economic value is shifting toward long-term holdings. It also indicates the market may have entered a phase of building energy in a low-volatility environment or attempting to form a bottom.

Murphy said the market could now be in one of three phases: a bear-market bottom, a secondary bottom with one final leg lower still to come, or an accumulation phase before the bull market resumes.

Still, he said it is reasonable to rule out, for now, the accumulation-phase scenario before a bull-market restart. That leaves two more plausible interpretations: Either the bottom has already formed, or the market will undergo one more decline before confirming the low.

Murphy said he would not recommend betting an entire position on any one scenario. Instead, investors should adopt a diversified positioning strategy to prepare for different outcomes. He added that, from a longer-term directional perspective, the case for Bitcoin being near a bottom has become relatively clearer.