Bitcoin drops sharply: What is the signal when short-term investors give up?

Bitcoin (BTC) recently experienced a significant correction, and what is the signal that many analysts are paying close attention to? According to current data, BTC is trading around $90.81K with a 0.18% decrease over the past 24 hours. But behind these price figures, what truly matters is investor behavior — especially short-term Bitcoin holders (STH).

Analyst Axel Adler Jr. has just revealed a noteworthy finding: short-term Bitcoin investors are currently realizing losses. This is not necessarily bad news in the traditional sense — but a market signal of great significance.

Why is it important when short-term investors realize losses?

To understand what the signal is in this case, we need to grasp how the mechanism works.

Short-term investors (STH) are defined as those who have purchased Bitcoin within the last 155 days. They tend to be more sensitive to price fluctuations and are easily influenced by market emotions. When prices decline, this group is often the first to sell, frequently forced to realize losses due to fear.

But in reality, what is the signal when this happens? It’s a positive sign. When the weakest investors (those prone to panic) are selling, they are essentially transferring Bitcoin from “weak hands” to “strong hands” — meaning investors with longer-term holding capacity.

How to identify this signal?

Analysts rely not on intuition but on on-chain data — direct records from the blockchain.

Axel Adler Jr. points out two of the most scientific indicators:

1. SOPR (Spent Output Profit Ratio) - 7-day moving average below 1.0

This index measures whether sellers are in profit or loss. When SOPR is below 1.0, it indicates that overall, sellers are selling at a loss. What is the signal here? It’s a sign of official capitulation.

2. Profit/Loss indicator at the block level at -3

This indicator reflects the sentiment of recent buyers. A level of -3 indicates extreme negativity, meaning most new investors are at a loss. This is the peak of fear in the market.

When these two indicators combine, what signal is — a potential bottoming point may be near.

How long does capitulation usually last?

The phases of STH realizing losses can last from a few days to several weeks, with no fixed timeline. However, when both SOPR and P/L indicators reach extreme levels, the market usually cannot sustain the decline much longer.

Does this always lead to a price bottom?

Not necessarily. What is the signal if there is no buying pressure? It remains a negative signal from the sellers’ side. For the market to truly recover, there must be enough buying power to absorb this selling pressure.

Buying power can come from:

• Long-term investors (LTH) accumulating
• Large institutional traders
• Positive news or market-supporting events

If buying pressure remains weak, what is the signal when STH capitulates? It’s just a step in a longer correction process.

What should Bitcoin investors do now?

Understanding what the signal is and its significance helps you make clearer decisions.

For long-term investors: This could be a potential accumulation zone. However, remember that pinpointing the exact bottom is always difficult. Instead of trying to “catch the bottom,” consider a dollar-cost averaging (DCA) strategy to minimize risk.

For short-term traders: Be cautious until SOPR rises above 1.0 and the P/L indicator turns positive. These signals will indicate a balance between buying and selling forces.

For new investors: No need to rush. Phases like this are psychological tests for investors. Emotions to sell often peak just before the market recovers. Having a clear strategy is more important than reacting to every signal.

What signs indicate the market is about to recover?

Watch for these changes:

• SOPR returns above 1.0 (STH begins to sell profitably)
• P/L indicator shifts into positive territory (improving sentiment)
• Trading volume increases significantly (active buying)
• Accumulation signals from large wallets

Until then, the STH capitulation phase may continue. What is the signal we should listen to? Not price, but on-chain data.

Tools to monitor this signal

If you want to track on-chain indicators yourself:

• Glassnode: Provides comprehensive on-chain data, including SOPR
• CryptoQuant: Specializes in flow analysis
• LookIntoBitcoin: User-friendly interface for retail investors

Most of these platforms offer both free access and premium features.

Difference between STH and LTH capitulation

Capitulation of short-term investors is common during minor corrections, whereas long-term investor (LTH) capitulation occurs only in deep bear markets. LTH capitulation signals much more serious market pressure — and is a heavier warning sign.

What is the current signal? Mainly STH capitulation, not LTH. This is quite positive in the long run.