This has been largely due to macroeconomic instability, aggressive liquidations, and new tariff measures imposed by President Donald Trump. As a result, investors are increasingly moving their capital into more secure assets.

As such, following Bitcoin’s sharp double-digit losses, which pushed the price below the crucial $80,000 mark, short-term holders (STHs) are now under increasing strain.

In times of heightened volatility, this cohort of BTC holders, who tend to be more sensitive to market fluctuations, are often the first to sell in an effort to minimize losses.

Further Downside Risks

CryptoQuant’s latest analysis noted that this behavior is reflected in the STH-SOPR (Spent Output Profit Ratio) indicator, which tracks the profitability of short-term holders. When this metric drops below 1.0, it signals that STHs are realizing losses, a phenomenon commonly associated with market capitulation.

Analyzing previous corrections in 2024, the crypto analytic platform identified significant STH-SOPR drops, particularly in May, July, and August, which correlated with sharp sell-offs by short-term investors. However, the current STH-SOPR has not yet fallen to these levels, which suggests that while the market has experienced a downturn, short-term holders have not yet fully capitulated.

This has sparked concerns about potential further declines if STHs begin to sell off more aggressively. As the market continues to grapple with these conditions, all eyes are on the $78,000 support level, which, as per the analysis, could serve as a crucial threshold for maintaining the current market structure. At the time of this writing, however, BTC is trading below it.

Should this support fail, the market could face additional downside pressure.

Potential 38.2% Retracement Retest

Matrixport’s latest analysis by Markus Thielen pointed out that while Bitcoin has remained relatively resilient, a return to its 38.2% retracement level seems increasingly likely.

The $78,000 level, which has been a frequent resistance point, is under greater pressure due to the broader risk-off environment and the wave of liquidations triggered by President Trump’s recent tariff measures.

To top that, consumer caution over inflation in the US, along with the Fed’s ongoing policy stance as signaled by Chair Powell, indicates that it could take time before Bitcoin benefits from supportive monetary conditions again.