Short-Term Bitcoin Holders Face Loss Panic as 97.5% Suffer Unrealised Losses, Study Reveals
Summary:
A study by analytics firm Glassnode reveals that 97.5% of short-term Bitcoin (BTC) holders are facing unrealised losses, prompting significantly negative sentiment. The findings stem from stark fluctuations in Bitcoin’s value over the last three months. Glassnode suggested further bearish trends could follow, however, contrasting views propose possible improvements in BTC's performance in Q4. Despite mild bearish sentiment indicated by the Crypto Fear & Greed Index, the threat of persistent loss looms large for short-term BTC holders.
Analysis indicates that the vast majority of "short-term holders" (STHs) of Bitcoin (BTC) are currently facing unrealised losses, sparking consternation among these investors. The data, provided by analytics company Glassnode in its latest report entitled "The Week On-Chain," suggests that a worrying 97.5% of Bitcoin's STHs are not making a profit on their investment.
Primarily, this demographic includes those who invested in BTC within the last three months, and their faith in this cryptocurrency has been severely shaken by the recent fluctuation in its value. STHs, defined as those who have held their coins for 155 days or less, have experienced a negative impact as the cryptocurrency's value fails to match their initial investment.
On September 17, Glassnode reported that those who haven’t spent their BTC are now facing a cost basis of $28,000, just 5% above the current market rate. The analytics firm's report further divides these STHs into two categories: holders and spenders. According to their findings, sudden changes in unrealised profitability have led to a shift in spending behaviour by STHs, culminating in a significant shift in sentiment regarding Bitcoin.
The report specifically highlights a drop in the cost basis of STH spenders compared to holders during the market downturn in mid-August, from $29k to $26k. The information suggests a prevailing state of anxiety and pessimism among Bitcoin investors.
Recent cautious sentiment echoed by Bitcoin traders and market analysts seems to align with Glassnode's findings, with many predicting Bitcoin's value will fall further. However, contrary views suggest a turn-around in BTC's fortunes might be on the horizon in the fourth quarter of the year. Adding to this, another prominent metric, the Crypto Fear & Greed Index shows only mild bearish sentiment at current price levels.
Nevertheless, the prospect of enduring loss feels increasingly palpable for STHs. Glassnode introduced a new measure of confidence in its report, comparing the cost basis of holders and spenders relative to BTC price.
Glassnode concluded by noting a serious sentiment shift within the Bitcoin market: A large portion of STHs are operating at a loss, leading to a wave of pessimism. There's evidence of prevailing fear driving actions within this group, a sentiment not seen since the crash of FTX. Notwithstanding, investors are urged to undertake thorough research before investing or trading, as every investment move carries inherent risk.
Published At
9/21/2023 1:18:46 PM
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