From January 7 to January 9, Bitcoin's price dropped 11%, breaking the 92,000 USD threshold for the first time in nine days. This decline led to the liquidation of over 257.5 million USD in leveraged long positions. This movement occurred amid profit-taking, positive economic data, and unstable sentiment related to the upcoming inauguration of President-elect Donald Trump.
Although the short-term downtrend raises concerns, three important indicators suggest that the level of 92,000 USD may have marked the local bottom for Bitcoin, opening up attractive opportunities for investors.
SOPR drops: A signal of Bitcoin's price bottom
On-chain data recorded the spent output profit ratio (SOPR) of Bitcoin dropping to 0.98 on January 10. This is a level at which short-term holders (STH) — those holding Bitcoin for less than 155 days — typically accept selling at a loss.
According to CryptoQuant, in the past 24 hours, over 36,400 BTC have been transferred from short-term holders (STH) to exchanges, pulling SOPR below 1. This reflects the market's capitulation sentiment, often accompanying price bottoms. In previous cycles, when SOPR dropped below 1, Bitcoin's price typically rebounded strongly, such as the 31% increase from 49,577 USD to 65,103 USD just three weeks after August 5, 2024.
Veteran investors assert that this movement is not the beginning of a new down cycle but rather a phase of 'weak hand shaking.' Investor Sean Buckley shares: 'I bought more at 92,800 USD. Although the price is fluctuating wildly, this is a crucial support area where Bitcoin could bounce back strongly.'
The adjusted dormancy flow index signals positive signs
The 'Entity-Adjusted Dormancy Flow' index — the ratio of Bitcoin's current market capitalization to its annual dormancy value — also suggests that the market has bottomed. When this index falls below 250,000, it is often seen as 'an ideal buying zone' historically.
On January 9, this index fell from 260,278 to a low of 210,000. In previous cycles, the recovery of this index above 250,000 often coincided with large price increases, such as the recovery from the bottom in July 2021, leading to a record high of 69,000 USD in November of that year.
The index is currently in the green zone, signaling a potential recovery from the bottom of 92,000 USD, which could even push Bitcoin towards new historical highs.
Long-term supply distribution behavior peaks
The supply of Bitcoin held by long-term holders (LTH) has decreased to its lowest level since December 6, 2024. This reflects profit-taking after Bitcoin reached highs above 108,000 USD. However, the pace of distribution has slowed, indicating that the market may be transitioning from a distribution phase to an accumulation phase.
According to Glassnode, the extreme slowdown in distribution often coincides with market bottoms. They note: 'In previous cycles, prices continued to rise even when LTH distribution peaked, proving that distribution peaks do not always coincide with the macro peak of the market.'
Despite Bitcoin dropping to 92,000 USD, on-chain data from SOPR, dormancy flow, and long-term holder behavior all suggest that this may be a local bottom. With positive signals from the market, this is an opportune time for investors to consider seizing opportunities during the accumulation phase and preparing for a new growth cycle.
