As a seasoned crypto investor with a few years of experience under my belt, the latest Glassnode report on Bitcoin short-term holders (STHs) taking massive losses in the recent crash doesn’t surprise me one bit. I’ve seen this pattern play out numerous times before, and it always follows the same script: panic selling during market downturns by weak hands, which ultimately results in large realizations of losses for the STH cohort.
As a financial analyst, I’d like to share some insights based on a recent report by Glassnode. It appears that short-term Bitcoin holders experienced the most significant loss-making episode since early 2022 during the latest market downturn.
Bitcoin Short-Term Holders Have Realized Huge Losses Recently
As a cryptocurrency market analyst, I’ve reviewed Glassnode’s most recent weekly report. Fewer than 1% of trading days have recorded greater short-term holder losses than during the current event in the history of the cryptocurrency.
The term “short-term holders” (STHs) in this context refers to investors who have purchased Bitcoin within the last 155 days. This category represents one of the two primary market segments based on duration of ownership, with the other being referred to as “long-term holders” (LTHs).
From a statistical standpoint, I’ve observed that the longer an investor holds onto their cryptocurrency, the less inclined they become to sell it. Consequently, long-term holders (LTHs) represent the market’s resilient segment, capable of withstanding market volatility through crashes and rallies. On the other hand, short-term holders (STHs) are more reactive to fear, uncertainty, and doubt (FUD), or fear of missing out (FOMO).
As a researcher studying the Bitcoin market, I wouldn’t be surprised by the vigorous response of the later cohort to the latest price instability. In fact, considering the recent market downturn, it’s reasonable to assume that this group has been actively selling their holdings at a loss – a common reaction during a crash known as panic selling.
Here is a simpler way to describe the chart: The chart illustrates the development of Bitcoin’s Realized Losses for long-term holders (STHs) during the previous years.
The Realized Loss measure signifies the cumulative amount of profit that Strategic Token Holders (STHs) have incurred from their sell transactions. This metric is “entity-adjusted,” which implies that it accounts for data related to distinct entities rather than just individual addresses.
A entity, as identified by Glassnode, is a grouping of interconnected addresses believed to be controlled by a single investor based on their analysis. Since transactions occurring among these addresses don’t represent genuine “selling,” it’s reasonable to exclude such data points in the analysis.
From my analysis of the graph, I observe a notable increase in the Bitcoin STH Realized Loss. This surge suggests that investors engaged in significant transactions during the recent market decline, resulting in considerable losses for them.
During this surrender phase, the indicator’s value reached an all-time high of $595 million in losses – a record setback for the group since the FTX crash marked the depths of the 2022 cryptocurrency downturn.
The report adds that only 0.92% of the total trading days observed (52 out of 5655) saw greater daily losses, emphasizing the significant magnitude of this correction in monetary terms.
Based on the graph’s analysis, significant surges in the metric seem to coincide with price bottoms in the market. Consequently, this recent downturn could potentially mark another price floor for Bitcoin.
BTC Price
At the time of writing, Bitcoin is trading at around $58,800, up 3% over the past week.
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2024-07-12 00:40