Bitcoin holdings owned by speculators are suffering significant losses after the recent “flash crash” that brought the price of BTC down to $26,000. According to research conducted by analytics firm Glassnode, nearly 90% of speculators’ BTC holdings are in the red.
In its weekly newsletter, “The Week On-Chain,” Glassnode reveals the true cost of the price dip for newcomers to the market. The drop in BTC/USD towards the end of last week had a major impact on market sentiment, even though speculators make up only around 10% of total Bitcoin holders. As predictions circulate about the price potentially dropping to $25,000 or even lower, the market is adjusting to a trading environment that has been characterized by sideways movement for months.
This adjustment is particularly visible among short-term holders (STHs), who are more on the speculative end of the hodler spectrum. Glassnode defines STHs as entities that have held BTC for 155 days or less, while long-term holders (LTHs) are commonly known as “hodlers.” The research reveals that out of the 2.56 million BTC held by STHs, only 300,000 BTC (11.7%) is still in profit.
The proportion of BTC supply in the hands of STHs is currently at multiyear lows. However, the past week has dramatically changed the profitability landscape for this group, which previously determined the trading range for BTC. The aggregate breakeven point for STHs, known as realized price, now stands above $28,500.
Glassnode’s analysis of the proportion of exchange inflows originating from STH entities in profit and loss indicates that this group is becoming increasingly sensitive to market movements. The research notes that the STH cohort is underwater on their holdings and highlights the largest loss dominance reading since the March sell-off to $19.8k. This suggests that STHs are not only experiencing losses but are also growing more price sensitive.
In contrast, the LTH investor base has shown little reaction to the price drop, with no significant increase in volume sent to exchanges. The aggregate balance of LTHs even reached a new all-time high. Glassnode describes the response of LTHs as “typical behavior” during bear market hangover periods.
Currently, 88.3% of the supply held by STHs (2.26 million BTC) is at an unrealized loss. This is compounded by an acceleration in STH realized losses being sent to exchanges and the loss of key technical moving average support, which puts the bulls at a disadvantage.
Overall, this research highlights the significant losses suffered by speculators following the recent “flash crash” in the BTC price. It also demonstrates the difference in response between short-term and long-term holders, as well as the impact on market sentiment and the trading environment. As always, it is essential for individuals to conduct their own research and make informed decisions when it comes to investments and trading.
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