Bitcoin drops below $80K as recent buyers realize losses but market indicators suggest stability

Bitcoin (BTC) has fallen below the $80,000 threshold after failing to to sustain the upward momentum built earlier in the day.

Based on CryptoSlate data, Bitcoin was trading at $77,400 as of press time, down 5.84% over the past 24 hours.

On-chain data indicates that recent buyers realizing losses contributed to the downturn, although the market structure remains poised for a potential recovery, according to the latest “Bitfinex Alpha” report.

BTC has fallen 13% in the past seven days, and the Spent Output Profit Ratio (SOPR), a key indicator of investor profitability, reinforces the capitulation by entering its first sustained period of losses since October 2024.

Capitulation phase

SOPR measures whether Bitcoin investors are selling at a profit or a loss. A sustained dip below 1, a neutral zone, signals that a significant portion of the market is liquidating positions at a loss.

Over the past two weeks, daily realized losses averaged $818 million, with Feb. 28 and March 4 recording the largest single-day losses of this cycle. The only larger single-day realized loss occurred on August 5, 2024, amid the yen-carry-trade unwind, which saw $1.34 billion in realized losses.

Short-Term Holder (STH) SOPR, which tracks newer market entrants, recorded its second-largest negative print of this cycle at 0.95, signaling that recent buyers are locking in substantial losses. 

Deep negative prints in STH SOPR have historically marked capitulation events, where panic-selling exhausts weaker hands and creates accumulation opportunities for stronger investors.

Moreover, an SOPR decline below 1 indicates loss-driven selling, mirroring major corrections in past cycles. However, rapid recoveries from this level usually suggest that buyers are defending cost basis levels, reinforcing bullish trends.

The extent of realized losses indicates that many short-term holders exited their positions below cost basis, succumbing to drawdown pressures.

Uncertain outcome

Historically, such capitulation events precede market stabilization, as weaker hands exit and stronger hands begin accumulating. 

The report noted that if Bitcoin’s bull market structure remains intact, SOPR should stabilize above 1, signaling re-accumulation and renewed investor confidence. Yet, prolonged weakness at negative levels close to 1 could suggest further downside risks, making SOPR a key metric to observe in the near term.

Additionally, Bitfinex analysts emphasized that macroeconomic and geopolitical uncertainties continue to be a major factor in driving market movements. They added that monitoring buy-side absorption and exchange-traded flows (ETF) remains critical in the coming week.

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