Bitcoin's Older Holders Now Bear 19.4% of Losses as Capitulation Broadens

Bitcoin's price fluctuations over the past few months have triggered a significant shift in the pattern of realized losses, affecting a broader range of investors. Initially, realized losses were predominantly borne by younger coins, indicating that newer investors were the first to react to price dips. However, this pattern has evolved, with older cohorts of Bitcoin holders now also experiencing substantial losses. This shift suggests a broadening capitulation among investors, as even those who typically hold for the long term are now selling at a loss.

The transition from younger to older coins in realizing losses is evident. In the early part of the year, losses were primarily from coins held for one week to three months. For instance, on February 27, when the price of Bitcoin dropped to $86.7k, the total realized losses were $51 million, with the 1 week–1 month and 1 month–3 months cohorts accounting for over 50% of these losses. In contrast, the 3 months–6 months cohort accounted for only 0.8% of the losses, indicating that mid-term holders were relatively unaffected by short-term price volatility.

However, by February 28, the composition of losses began to change. The price of Bitcoin slipped to $83.7k, and the losses borne by the 3 to 6 months cohort surged nearly fivefold from the previous day. This marked the first sign of older holders reacting to market pressure, as their share of losses grew to 3.8%. This shift suggested that the pain was spreading beyond newer investors, with mid-term holders starting to feel the strain.

By April 7, the pattern of realized losses had evolved further. With the price of Bitcoin at $78.9k, total realized losses dropped to $34.4 million. Interestingly, the composition of these losses showed an even split between short-term and mid-term holders, with the 3 months–6 months cohort now accounting for 19.4% of total realized losses. This indicated a broadening of capitulation, as more holders were choosing to sell and lock in their losses rather than wait for a market recovery. The increase in losses from older cohorts suggests that even experienced holders are acting on a consensus opinion among traders that the near-term price outlook is dismal.

The shift in loss realization from younger to older Bitcoin holders is a significant signal for the market. This pattern is often seen at the tail end of a market correction and may provide a possible buying opportunity for investors who believe the current sell-off is nearing its conclusion. However, if broader market conditions continue to deteriorate, there is definite downside risk for any buying at this point. Moving forward, it will be crucial to monitor whether this capitulation trend continues and how it may influence the price of Bitcoin in the long run.