Bitcoin at risk: Can BTC demand recover without new capital?
Bitcoin’s long-term holders (LTHs) are becoming less profitable, yet they continue to hold their positions.
Bitcoin [BTC] has yet to establish a sustained bullish structure since its decline to $62,000 earlier in February. Although the asset trades 15.8% higher at $71,800, the price remains significantly below its all-time high, leaving the recovery vulnerable to renewed selling pressure.
The recent rebound has not removed downside risk. Long-term holder behavior remains a key variable, as shrinking profitability can historically increase the incentive to exit positions.
In highly volatile conditions, even modest shifts in LTH conviction can materially affect price direction.
LTH vs. STH profitability signals bearish bias
On-chain data reinforces this risk; market structure indicators suggest BTC remains in a broader bearish phase, with price stability masking the potential for further downside.
This assessment is supported by the long-term holder to short-term holder Spent Output Profit Ratio (LTH/STH SOPR). The metric compares realized profitability between both cohorts.
At the time of writing, the readings showed that short-term holders were more profitable than long-term holders, confirming a bearish skew in market structure.
When long-term holder profitability contracts, selling pressure can increase as investors attempt to preserve remaining gains. If LTHs begin distributing supply, it could weigh on price and sentiment, particularly in an environment where demand remains subdued.
Long-term holders are defined as addresses holding Bitcoin for more than 155 days, while short-term holders have held for 155 days or less.
Long-term holders continue to accumulate
Despite declining relative profitability, long-term holders remain largely inactive. On-chain data shows no significant increase in distribution from this cohort, suggesting conviction remains intact.
Binary Coin Days Destroyed (CDD) supports this view. The metric indicates that older coins are not being moved, confirming that long-term holders continue to retain their Bitcoin despite current market conditions.
This behavior aligns with a gradual rise in Net Unrealized Profit/Loss (NUPL), which has increased steadily to 0.21, at press time. A reading above the neutral level of 0 indicates that investors, on aggregate, are more profitable than they were five days earlier.
Rising aggregate profitability may explain why long-term holders remain patient, as they appear to be positioning for a broader shift toward higher returns.
Bitcoin dominance and capital flows
At press time, Bitcoin dominance sat at 58%, reflecting its share of total crypto market capitalization according to CoinGlass. This level suggests a balance between supply and demand, which has helped keep prices relatively stable.
A sustained increase of 5% or more in dominance would typically indicate fresh capital inflows. However, this has not materialized. CoinMarketCap data shows that approximately $1.12 trillion has been wiped from Bitcoin’s market capitalization since its all-time high.
Without a gradual return of capital at this scale, price is likely to remain constrained, with Bitcoin continuing to trade near the lower end of its current range.
Final Thoughts
- LTH profitability has fallen below that of STHs, a structure often associated with bearish market dominance.
- The overall Bitcoin profitability continues to improve as holders across cohorts remain largely inactive.
