Definition. The Long-Term Holder Capitulation Risk is a tool to identify periods of elevated stress on this cohort of Bitcoin investors. It utilises a combination of two metrics — LTH-MVRV (red) and LTH-SOPR (orange) — and seeks confluence when they both fall below 1.0, shading the price chart in blue when this condition is met.

Technical. The capitulation risk condition is:

• Elevated LTH Capitulation Risk: LTH-SOPR < 1 AND LTH-MVRV < 1 — rendered as blue columns behind price
• Both metrics are plotted against a Profitability Threshold line at 1.0 (blue)

Interpretation. The two components capture complementary sides of cohort stress:

• LTH-MVRV indicates the unrealized profit/loss of the LTH cohort. Values below 1 indicate that market prices have declined below the Long-Term Holder Realized Price, suggesting the average LTH is underwater on their held coins.

• LTH-SOPR indicates the realized profit/loss of the LTH cohort. Values below 1 indicate that the average spent coin by LTHs is realizing a loss.

• LTH Capitulation Risk is indicated in blue when both MVRV and SOPR are below 1.0. This indicates that the LTH cohort are both underwater on unspent coins (MVRV), and that those coins being spent are locking in realized losses (SOPR).

Historically, this confluence has clustered in late-stage bear markets, where even the strongest hands are pushed into locking in losses. Extended periods of elevated capitulation risk describe deep drawdown regimes, and their eventual resolution has often coincided with seller exhaustion near cycle lows.

Notes. Coined by Glassnode in The Week On-chain, Week 28 2022 Newsletter. Built from LTH-SOPR and LTH-MVRV. A similar confluence framework applied to miners is charted in Miner Capitulation Risk.