Why Panic Selling Is a Good Sign for Bitcoin Bulls

When it comes to investing, nearly everyone knows the phrase: ‘Be fearful when others are greedy, and greedy when others are fearful’. Yet very few actually act on it. This is even more obvious in Bitcoin, where volatility runs high and shakes out most participants.

In this deep dive, we’re focusing on short-term Bitcoin holders, those who have held their coins for less than 155 days and how their behaviour often signals turning points in the market.

The chart above shows the Bitcoin price in black, overlaid with the realised profit/loss ratio for short-term holders as the coloured band. It perfectly illustrates how reactive this cohort is. When the STH P/L ratio peaks, it often lines up with local Bitcoin tops. And when it plunges toward -1, it typically aligns with major price bottoms and that’s what I want to highlight.

Since 2022, every major Bitcoin price trough has occurred when the STH realised P/L ratio was close to -1. That level signals that nearly all short-term holders selling their coins are doing so at a loss. Today, as highlighted by the blue circle, we’re seeing this same pattern. In fact, the ratio is at its lowest point in the last four years, even lower than it was when Bitcoin traded at $15K, $25K, $49K or $74K.

The message is clear: this on-chain data suggests Bitcoin is statistically near a bottom. Historically, those who bought during similar conditions, when fear was high and short-term holders were capitulating, came away with strong gains and prime accumulation levels.

Of course, this doesn’t guarantee that the bottom is in. Price may still dip further. But this particular dataset has consistently marked opportunity zones. A dollar-cost averaging strategy is well suited for these periods and can help smooth out short-term volatility. If you’re not already set up, your Stormrake Broker can help structure it for you.

Just remember, trying to pick the bottom usually leaves you with stinky fingers.

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