Bitcoin (BTC) has yet to establish a sustainable bullish pattern since dropping to $62,000 earlier in February. Although the asset is trading up 15.8% at $71,800, the price remains significantly below its all-time high, leaving the rally vulnerable to further selling pressure.
The recent rebound has not eliminated downside risk. The behavior of long-term holders remains a key variable, as declining profitability can historically increase the incentive to exit positions.
In highly volatile conditions, even modest changes in LTH conviction can materially affect price direction.
Profitability of LTH relative to STH 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 decline.
This assessment is supported by the profit ratio of output spent between long-term holders and short-term holders (LTH/STH SOPR). The metric compares the profitability achieved between the two cohorts.
At the time of writing, readings showed that short-term holders were more profitable than long-term holders, confirming a bearish bias in the market structure.
Source: Alphractal
When holders’ long-term profitability declines, selling pressure may increase as investors attempt to preserve remaining gains. If LTHs begin to distribute supply, this could weigh on prices and sentiment, particularly in an environment where demand remains subdued.
Long-term holders are defined as addresses that have held Bitcoin for more than 155 days, while short-term holders have held it 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 the distribution of this cohort, suggesting that belief 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 hold on to their Bitcoin despite current market conditions.
Source: CryptoQuant
This behavior aligns with a gradual increase 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, overall, are more profitable than they were five days earlier.
The rise in overall profitability may explain why long-term holders remain patient, as they appear to be positioning themselves for a broader transition to higher yields.
Bitcoin Dominance and Capital Flows
At press time, Bitcoin dominance stood at 58%, reflecting its share of the total crypto market cap 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 generally indicate new capital inflows. However, this did not materialize. Data from CoinMarketCap shows that approximately $1.12 trillion has been wiped from Bitcoin’s market cap since its all-time high.
Without a gradual return of capital on this scale, prices will likely remain constrained, with Bitcoin continuing to trade near the lower end of its current range.
Final Thoughts
- The profitability of LTH has fallen below that of STH, a structure often associated with bearish market dominance.
- Bitcoin’s overall profitability continues to improve while holders across different cohorts remain largely inactive.
