Bitcoin's 'Strongest Hands' Are Cracking: Long-Term Holders Show Unprecedented Weakness

Bitcoin's Long-Term Holders Show Signs of Strain

Bitcoin's long-term holders—often considered the market's strongest hands—are showing unprecedented signs of weakness following February's sell-off, with on-chain data revealing concerning trends that could signal deeper market corrections ahead.

Weaker Accumulation Compared to Past Crashes

During February's dip to $62,800, long-term holder accumulation was notably weaker compared to previous major market events like the FTX collapse and LUNA crash. Glassnode analysts described this as a "rare shift in conviction typically seen in deeper stages of bear markets," suggesting veteran investors are losing their traditional resilience.

Key Metric Flips for First Time Since May 2022

A critical indicator has turned negative: the 7-day exponential moving average of the Long-Term Holder Spent Output Profit Ratio (SOPR) has fallen below 1. This marks the first time since May 2022 that this metric has flipped, indicating that veteran investors are now realizing losses rather than profits when they move their coins.

Where's the Next Support Level?

With long-term holders—who typically serve as the last line of defense in market cycles—showing strain, the question becomes: where is Bitcoin's next floor? Glassnode points to $54,000 as the next critical support level if Bitcoin breaks below $65,000.

Macroeconomic Headwinds Persist

Recent economic data has provided little relief for Bitcoin bulls:

• The U.S. added 130,000 jobs in January, dampening expectations of Federal Reserve rate cuts
• Inflation slowed to 2.4%, but failed to trigger a recovery rally
• Markets still assign a 90% probability that interest rates will remain unchanged in March

The Bullish Counterargument

Not everyone believes the floor will give way. Sean McNulty, APAC derivatives trading lead at FalconX, argues that $60,000 will hold as the cycle floor in the near term, citing "healthy buying flows" and the absence of a systemic blow-up like FTX during the recent sell-off.

McNulty describes the recent drawdown as "orderly deleveraging" that led to excess speculative capital rotating out of crypto without structural failure, suggesting the market may have already absorbed the worst of the selling pressure.

Potential Catalysts for Recovery

Several factors could trigger a Bitcoin recovery:

• The CLARITY Act providing regulatory clarity
• More Fed rate cuts than currently expected
• Sustained ETF inflows continuing to provide institutional support