This Bitcoin (BTC) price plungethe world’s largest cryptocurrency, has taken a bulky toll on short-term holders. Recent reports have revealed that many of these BTC holders are now in the red, suffering losses due to cryptocurrency price collapse and constant market volatility.
Low-term holders under pressure
On September 4, Glassnode, a blockchain market intelligence platform, published a detailed report report on the financial burdens that short-term Bitcoin holders are currently experiencing due to increasing market volatility and BTC price declines.
Currently, Low-term holders hold Bitcoins at a significant loss, which makes potential source of risk. Looking at the broader market, unrealized losses, which account for just 2.9% of BTC’s total market capitalization, remain historically low. This indicates that the aggregate investor is still relatively profitable in the face of market declineswith the ratio of total unrealized profit to unrealized loss being 6 times greater.
Nevertheless, tiny term BTC holders who recently bought Bitcoin are bearing the brunt of the market declines and taking most of the pressure. Their unrealized loss significantly dominates the total and continues to grow, but this situation has not reached full bear market conditions like previous market crashes. The losses, however, reflect a more turbulent period, similar to what we saw in 2019..
These market observations are based on short-term holders’ ratings. Market Value to Realised Value Ratio (STH MVRV). Bitcoin’s STH MVRV has fallen below the 1.0 breakeven point, currently trading at similar levels to August 2023 when the market was recovering from FTX failure.
This assessment suggests that the average recent BTC investor is facing an unrealized loss. As long as bitcoin price By crossing the $62,400 mark, Glassnode is predicting further weakening of an already shrinking market.
Currently, all age groups and segments in the short-term holder group are experiencing unsettled losses. This is indicative of widespread stress among short-term Bitcoin investors in the cryptocurrency market.
Current State of the Bitcoin Market
Glassnode’s report provides in-depth analysis current status of the Bitcoin marketin particular by assessing price movements, investor sentiment and overall market behavior. In the last six months Bitcoin price action has not changed, and many investors have shown indifference or even apathy.
However, over the last three months the market has seen more down pressurewhich caused a significant drop in BTC prices. Although compared to historical bull market regimes, this drop is relatively smaller than previous bear markets.
Glassnode revealed that realized profit dropped sharply from Bitcoin at all-time high over $73,000 in March 2024. This suggests that fewer Bitcoins are being sold at profit, while Realised Losses are increasing as the market contraction continues.
The current risk ratio of selling bitcoin is also very low, meaning that most of the assets being traded are close to breaking even. This means that the current market may be overly saturated in terms of profit and loss taking, suggesting possibility of greater variability in the future.
Featured image created with Dall.E, chart from Tradingview.com
