Bitcoin Not Out of the Woods Yet: Analyst Says Reversal Signals Still Missing

Despite recent price stability that has led some market participants to speculate about a Bitcoin bottom, on-chain data suggests the cryptocurrency is still navigating a period of capitulation rather than gearing up for a confirmed trend reversal, according to a detailed analysis published on CryptoQuant.

Analyst MorenoDV, in a contribution to the on-chain analytics platform, cautioned that while Bitcoin may be entering a bottoming zone, the technical conditions required for a sustainable recovery have not yet materialized. The assessment centers on two key metrics that track the behavior of short-term holders—investors who have held their coins for a relatively brief period.

Key Indicators Point to Continued Pain

MorenoDV highlighted that the Market Value to Realized Value (MVRV) ratio for short-term holders (STHs) currently sits at 0.8. This figure is below the critical threshold of 1.0, indicating that the average recent buyer is holding a position at a loss. In practical terms, this means a significant portion of market participants who entered the market recently are underwater on their investments.

Compounding this picture, the average Spent Output Profit Ratio (SOPR) for short-term holders also remains under 1.0. This metric tracks whether coins being moved on the blockchain are being sold at a profit or a loss. A value below one suggests that holders are selling at a loss, often described as “selling in pain.” This behavior is characteristic of a capitulation phase, where fear and the need to exit positions outweigh any hope of recovery.

The Two Conditions for a True Reversal

According to the analyst, a genuine trend reversal is not simply a matter of the price rising. For the market to transition from a bearish to a bullish structure, both the STH-MVRV and the STH-SOPR must decisively cross back above the 1.0 mark. This would signal that recent buyers are once again in profit and that selling pressure from loss-taking has subsided.

“A price rebound alone is insufficient,” MorenoDV argued. Until these on-chain conditions are met, the market is likely to remain in an oversold state, vulnerable to further downside or prolonged sideways movement. The current data suggests that the selling pressure, while potentially exhausting, has not yet fully run its course.

What This Means for Investors

For traders and long-term holders alike, the analysis serves as a reminder that price action can be deceptive. While Bitcoin’s price may appear to be stabilizing, the underlying sentiment among the market’s most reactive participants—short-term holders—remains bearish. The data implies that any rally in the near term could be met with selling pressure from those looking to break even or cut losses, rather than a wave of new conviction buying.

The distinction between a bottoming process and a confirmed reversal is critical. A bottoming zone can be a lengthy and volatile period, characterized by false starts and continued weakness. The on-chain evidence provided by CryptoQuant suggests that the market has not yet exited this zone.

Conclusion

While Bitcoin may be approaching a price level that historically has attracted buyers, the on-chain data from CryptoQuant indicates that the market is still in a capitulation phase. The key indicators for short-term holders—MVRV and SOPR—remain below the thresholds that historically precede a confirmed trend reversal. Until these metrics cross above 1.0, investors should be cautious about interpreting price stability as a signal that the worst is over.

FAQs

Q1: What is the MVRV ratio for short-term holders?
A: The Market Value to Realized Value (MVRV) ratio compares the current market price of coins to the price at which they were last moved. For short-term holders, a value below 1.0 means the average recent buyer is at a loss.

Q2: What does the SOPR indicator tell us?
A: The Spent Output Profit Ratio (SOPR) measures whether coins being spent on the blockchain are sold at a profit or a loss. A value below 1.0 indicates that holders are selling at a loss, a sign of capitulation.

Q3: Why is a price increase not enough for a trend reversal?
A: According to the analyst, a true reversal requires on-chain confirmation that short-term holders are no longer selling at a loss. Without the MVRV and SOPR crossing above 1.0, any price rebound could be temporary and met with selling pressure from loss-taking investors.