Bitcoin (BTC) has weathered a series of blows and although sentiment appears to be more stable with the asset testing $64,500 again, the market has yet to earn a bullish tag.
Traditional investors appear to be bouncing back, adding $75.76 million in inflows between July 13 and 17, but some forces are keeping the market cautious. Long-term investors are at the center of this caution.
Long-term Bitcoin holders still need monitoring
Long-term holders are investors who hold their cryptocurrencies without moving them for at least 155 days, and on-chain data shows that this group is selling at a loss rather than a profit.
The 7-day moving average of the long-term holder SOPR – the Spent Output Profit Ratio (SOPR), which measures whether coins are moving at a profit or a loss – stands at 0.94 at the time of writing, below the breakeven point of 1.
This reading tells us that long-term owners are leaving their businesses bitcoin with losses of around 6% so far.
This figure marks a sharp improvement from earlier in the cycle, when the group sold at a 27% loss and LTH SOPR fell to 0.73.
Less selling doesn’t mean complete conviction, and a recovery doesn’t mean the market is locked into a recovery, so long-term investors remain exposed to more price volatility.
The monthly chart reinforces this caution; LTH SOPR shows that these investors have been selling at a loss of 12% since June.
History still provides an element of balance, as Bitcoin rallies were preceded by long periods of loss-taking, including the market hitting all-time highs in 2020 and 2023 after breaking out of similar phases.
Stock market CDD indicates short-term holder dominance
Exchange Coin Days Destroyed (CDD) weights each moving coin by how long it has been dormant; This allows analysts to see whether long-term or short-term holders are driving the coins landing on exchanges, and the metric currently shows short-term, active participants as the dominant force.
A rising Stock Market CDD normally signals that sellers are controlling the market as selling pressure increases, a classic bearish trend, but here the opposite is happening and signals a more relaxed phase.
Fewer long-term holders are moving cryptocurrencies, and given that this group’s losses are only around 6%, the structure remains constructive and raises the possibility of a faster recovery from current levels.
The foreign exchange reserve reflects this change, and although long-term holders do not dominate the reserve, they contribute to the decline that moved the reserve from 2,718 million BTC to 2,704 million BTC.
This decline returns the reserve to its end-June level around June 24.
Will US investors continue financing?
Economic pressures and the threat of resurgent inflation continue to weigh on the market.
Inflation slowed last week according to official data, but concerns have increased as the conflict between the US, Iran and Israel escalates. Oil responded to this tension, with WTI crude rising to $85.59 at Monday’s open, its highest level since June 12.
Inflation concerns are largely fueled by oil, as rising crude oil increases production costs across the economy and increases risk aversion. Bitcoin depends on risk appetite. If oil continues to rise, US investors can reduce their exposure through spot US Bitcoin ETFs.
Final Summary
- Long-term investors have slowed their selling and are now selling at a loss of 6% compared to 27% previously.
- Bitcoin still needs risk appetite, so rising oil and new inflation fears could push US investors to reduce their exposure.
