The Long-Term Holder Capitulation Risk is a tool to identify periods of elevated stress on this cohort of Bitcoin investors. It usilises a combination of two metrics, and seeks confluence when they both fall below 1.0:
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).
Glassnode in The Week On-chain, Week 28 2022 Newsletter