Bitcoin (BTC) fell 11% between Jan. 7 and 9, breaking below the $92,000 level for the first time in nine days.
This decline led to the liquidation of over $257.5 million in leveraged long positions over the same period and coincided with profit-taking, strong economic data and uncertainty surrounding US President-elect Donald Trump’s upcoming inauguration.
Despite this short-term bearish momentum, three data metrics indicate that the drop to $92,000 may have marked the local bottom for BTC, providing a good entry point for investors.
SOPR drop hints at Bitcoin price bottom
Onchain data reveals that Bitcoin’s spent output profit ratio (SOPR) dropped to 0.98 on Jan. 10, suggesting that short-term holders (STH) — investors who have held Bitcoin for less than 155 days — are selling at a loss.
The recent drawdown in Bitcoin price is “driven by short-term holders realizing losses,” market intelligence firm CryptoQuant said in a Jan. 9 post on X.
“In the past 24 hours, 36.4k Bitcoin have been transferred from Short-Term Holders to Exchanges, with the Spent Output Profit Ratio (SOPR) dropping below 1. ”
Bitcoin SOPR. Source: CryptoQuant
SOPR measures the profit or loss of spent Bitcoin outputs by comparing the value of coins when they were last moved to their value when they are spent again.
The short-term SOPR focuses on coins moved in less than six months and can be used to indicate market sentiment. A value of less than 1 might suggest capitulation or a market bottom, potentially signaling a good time to buy.
This scenario has often preceded price recoveries, indicating a potential buying opportunity. When SOPR fell to 0.90 following Bitcoin’s drop to $49,577 on Aug. 5, 2024, it was followed by a 31% recovery in price to $65,103 three weeks later.
More recently, BTC’s 62% rally to all-time highs above $108,000 between Nov. 5 and Dec. 17, 2024, was preceded by a drop in the SOPR ratio below 1 on Nov. 4.
As such, some investors saw the drop to $92,000 as an opportunity to buy, interpreting the price action as a shakeout of weak hands rather than a new bear cycle.
“Adding some BTC spot here at $92.8k–frustrating price action, but have to buy these major support areas,” said Bitcoin investor Sean Buckley, adding:
“Bitcoin’s $92k range would be the area to bounce hard if we’re going to bounce.”
BTC entity-adjusted dormancy flow flashes green
Another metric that can be used to determine whether the Bitcoin market has bottomed out is the entity-adjusted dormancy flow, which represents the ratio of BTC’s current market capitalization and the annualized dormancy value (measured in US dollars).
Historically, a drop in the indicator below 250,000 (red circles) presents a “good historical buy zone” and has often preceded significant price recoveries or marked the end of price corrections.
Bitcoin entity-adjusted dormancy flow. Source: Glassnode
The indicator dropped from 260,278 on Dec. 16 to reach a low of 210,000 on Jan. 9.
Historically, breakouts above 250,000 after a previous dip have coincided with the beginning of significant bull runs. One instance is when Bitcoin bottomed out in July 2021 and began a new bull run, with the metric falling into the green zone. Bitcoin went on to hit a record high of $69,000 on Nov. 10.
Related: Bitcoin speculators panic sell at $92K in ‘good time for accumulation’
With the indicator sending a bullish signal again, the price could recover from the recent bottom at $92,000 to stage a massive move toward all-time highs.
Bitcoin long-term supply distribution has peaked
Additionally, the percentage of Bitcoin supply held by long-term holders (LTHs) reached the lowest since Dec. 6, 2024. This means that distribution by LTHs has occurred over the last month, perhaps driven by profit-taking following Bitcoin’s run to all-time highs above $108,000.
Now, the distribution rate by LTHs has slowed down, with the 30-day percent change in LTH supply suggesting that the distribution rate has likely peaked, reaching extremes seen in previous cycles, according to Glassnode.
Source: Glassnode
The reduced rate of LTH supply distribution suggests that the market might be transitioning from a distribution phase to accumulation, which historically aligns with market bottoms.
Explaining this phenomenon in a Jan. 10 X post, Glassnode said:
“In past cycles, price continued to climb even after LTH distribution peaked. This infers that a peak in distribution doesn’t always align with an immediate macro top.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
