Bitcoin’s (BTC) price is waiting for long-term holders or institutional demand to absorb the recent sell pressure from short-term holders, according to the latest “Bitfinex Alpha” report.
Bitcoin’s decline from its all-time high of $109,590 on Jan. 20 has intensified concerns about the role of institutional investors in sustaining market momentum. The recent pullback below $77,000 marks a 29.7% retracement from its peak, making it the second-deepest correction of the current bull cycle.
Historically, 30% corrections have often preceded a market rebound, but current conditions indicate that “deeper-pocketed investors” have yet to fully absorb the sell-side pressure.
Institutional flows and market stability
Institutional adoption, primarily driven by spot Bitcoin exchange-traded funds (ETFs) and corporate accumulation, has played a critical role in reducing the depth of retracements in this market cycle.
Past corrections have ranged between 18% and 22%, highlighting a shift toward shallower pullbacks.
However, the current 29.7% decline suggests that institutional support has weakened. The report argues that ETF outflows, which reached $921.4 million over four of five trading days last week, reinforce this trend.
Without renewed buying from institutional investors, Bitcoin could face a prolonged period of price consolidation or further downside.
Amplified sell pressure
Market data indicates that Bitcoin short-term holders (STHs), defined as wallets holding BTC for less than 180 days, are increasingly selling at a loss.
As the price dropped below $90,000, STHs experienced net unrealized losses, which has historically been a catalyst for increased sell pressure.
A particularly vulnerable segment within this group consists of “shrimp” addresses — holders of less than 1 BTC — who tend to sell into relief rallies after extended periods of unrealized losses.
The cost basis trends of recent Bitcoin buyers further illustrate weakening demand. In strong market conditions, the cost basis of those who acquired BTC within the last 7 days to 30 days typically rises above those who purchased 1 month to 3 months prior, signaling bullish sentiment.
However, this pattern reversed in the first quarter of 2025, with new entrants hesitating to absorb market supply. The shift coincided with Bitcoin’s decline below $90,000, reflecting a transition from post-all-time high momentum to a more risk-averse environment.
Key indicators reflect market hesitancy
The Short-Term Holder Spent Output Profit Ratio (STH-SOPR) is a critical metric for assessing Bitcoin’s current sell pressure. It measures whether STHs are selling at a profit or a loss.
Since Bitcoin fell below $95,000, the 30-day moving average of STH-SOPR has consistently remained under one, indicating that most short-term investors are selling at a loss.
The indicator, which has 1 as the neutral zone, dropped to 0.97 when BTC briefly reached $78,000. This movement marked one of the sharpest capitulation events of the cycle.
Persistent downward pressure has contributed to broader market caution, leading to continued selling by short-term participants. Historically, such conditions have preceded local seller exhaustion, where weaker hands exit, and stronger hands begin accumulating again.
Long-term investors often monitor these conditions for potential re-entry opportunities, recognizing that deeply negative STH-SOPR readings can serve as a contrarian buy signal.
The report noted that as Bitcoin navigates one of its most significant retracements in this cycle, institutional investors’ responses will be critical in determining the next phase of market movement.
If institutional capital returns in meaningful volume, it could provide the necessary support for a recovery. However, without renewed interest from deep-pocket investors, Bitcoin’s price action could remain subdued, marked by continued range-bound trading or further downside.
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