Bitcoin speculators are facing a state of panic as a new study reveals that almost all of them are experiencing unrealized losses. Glassnode, an analytics firm, published its findings in the latest edition of its newsletter, “The Week On-Chain.” The study focused on Bitcoin’s short-term holders (STHs) and discovered that 97.5% of them are currently in the red.
Over the past few months, the price volatility of BTC has tested the patience of investors, particularly those who purchased the cryptocurrency within the last three months. STHs, who hold BTC for 155 days or less, have seen their aggregate cost basis decline significantly as market support vanished.
As of September 17th, the cost basis for STHs who had not spent their BTC was $28,000, which is approximately 5% higher than the current spot price. Glassnode also analyzed the spending behavior of STHs and found a correlation between changes in implied profitability and shifts in spending, suggesting a change in sentiment among this group.
The report stated that during the market downturn in mid-August, the cost basis for STHs who were spending their BTC fell below the cost basis of those who were holding onto it, indicating a state of panic and negative sentiment among short-term holders.
These findings align with the overall cautious sentiment among Bitcoin traders and analysts, many of whom predict further declines in BTC price. However, there are optimists who believe that the final quarter of the year could bring a change in fortunes for BTC.
Despite the mixed opinions, STHs are feeling the pressure of potential permanent losses. Glassnode introduced a trend confidence metric, which calculates the difference between spender and holder cost basis divided by the BTC price. The firm concluded that almost all short-term holders are now underwater on their supply, resulting in a negative shift in sentiment dominated by panic.
This level of panic among short-term holders has not been seen since the collapse of FTX. The threat of permanent loss is causing investors to question their investment decisions and take a more cautious approach.
The Crypto Fear & Greed Index, a classic sentiment gauge, remains moderately bearish at current price levels. However, it is clear that the sentiment among short-term holders is dominated by panic, which could have significant implications for the market.
It is important to note that this article does not provide investment advice or recommendations. Investing in cryptocurrencies carries risks, and readers should conduct their own research before making any investment decisions.