Bitcoin (BTC) Recovery Unlikely Until Toxic Supply Is Absorbed: Data

Bitcoin (BTC) plunged below $77,000 on Monday following a fresh round of threats directed at Iran by US President Donald Trump. Panic selling is accelerating across the market as major profitability metrics drop below critical levels.

New data now suggests that a rapid V-shaped recovery remains unlikely.

Deepening Bitcoin Panic Selling

Bitcoin’s latest decline is developing into a broader market crisis rather than a routine short-term correction, as on-chain data points to a cascading sell-off driven by leverage liquidations and growing fear across the spot market. According to CryptoQuant data, long-term holders who accumulated Bitcoin between six and 12 months ago are now under heavy pressure, as their average realized entry price sits near $110,851.

Following the recent market drop, many of these investors moved into deep unrealized losses, triggering a wave of exchange inflows since May 14.

The crypto analytics platform’s stats reveal that the Spent Output Age Bands (SOAB) ratio for 6-12 month coins surged to 10.54%, which is far above its normal level below 1%, and indicated large-scale capitulation from long-term holders. Such spikes have historically reflected investors realizing large losses and exiting positions, which ends up increasing spot-market selling pressure.

The weakness then spread to short-term traders. While most exchange inflows typically come from coins held for less than one day, profitability metrics showed increasing panic-driven selling activity. On May 16, the Short-Term Holder SOPR fell to 0.994 while adjusted SOPR dropped to 0.996, both below the 1.0 level that usually separates profit-taking from loss realization.

Even on May 17, STH-SOPR remained weak at 0.999. CryptoQuant said this confirms that many short-term investors are now selling at losses rather than taking profits. The firm warned that a quick V-shaped recovery remains unlikely until “toxic” supply is absorbed and market sentiment stabilizes.

Deeper Correction Ahead

The growing market stress has also strengthened bearish views among several crypto analysts. Doctor Profit, for one, warned yet again that a major correction may be approaching soon.

Mr. Wall Street also said Bitcoin could see a much deeper decline after its recent 10% pullback. The commentator claimed that bullish sentiment has already faded and repeated his view that the crypto asset may eventually drop to the $45,000 level.