Bitcoin speculators are underwater on 88% of their BTC bags — Research

Bitcoin (BTC) holdings owned by speculators are nearly 90% in the red after the “flash crash” to $26,000, new research says.

In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode reveals the true cost of last week’s BTC price dip to newcomers.

Short-term holders “increasingly sensitive” to BTC price

While only totalling around 10%, the drop on BTC/USD seen toward the end of last week upended market sentiment.

As BTC price predictions focus on $25,000 and even lower, the dust is settling on a trading environment accustomed to months of sideways behavior.

Arguably nowhere is this more visible than among short-term holders (STHs) — the more speculative end of the hodler spectrum.

Glassnode defines an STH as an entity holding onto BTC for 155 days or less. Its counterpart is the long-term holder (LTH), more widely referred to as a classic “hodler.”

“Out of the 2.56M BTC held by STHs, only 300k BTC (11.7%) is still in profit,” the research states.

<em>Bitcoin STH supply profit and loss chart (screenshot). Source: Glassnode</em>

As Cointelegraph reported, the overall share of the BTC supply in the hands of STHs is at multi-year lows. That said, the past week has dramatically reshaped profitability among the cohort, which previously functioned as a framework for the BTC trading range.

The STH aggregate breakeven point, known as realized price, currently sits above $28,500.

<em>Bitcoin STH/LTH cost basis (realized price) chart. Source: Glassnode</em>

Analyzing the proportion of exchange inflows originating from STH entities in profit and loss, respectively, Glassnode predictably warns that the cohort was becoming increasingly “sensitive” to market movements.

“We can see a steady decline in profit dominance as the 2023 rally progressed, as more STHs acquired coins with an increasingly elevated cost basis,” it reveals.

“This week we saw the largest loss dominance reading since the March sell-off to $19.8k. This suggests that the STH cohort are both largely underwater on their holdings, and increasingly price sensitive.”

<em>Bitcoin STH volume to exchanges bias ratio chart (screenshot). Source: Glassnode</em>

Seasoned hodlers’ BTC supply share hits new peak

By contrast, the LTH investor base has yet to exhibit any marked reaction to the return to $26,000 and below.

Related: Most fear since SVB collapse — 5 things to know in Bitcoin this week

“If we look to the response by Long-Term Holders (LTHs), we can see that there is almost no response,” Glassnode confirms.

“The LTH cohort did not meaningfully increase volume sent to exchanges, and their aggregate balance actually ticked up to a new ATH this week.”

An accompanying chart showing LTH exchange inflows describes these as “negligible.”

“Long-Term Holders remain largely unfazed and unresponsive, which is a typical behavior pattern of this cohort during bear market hangover periods,” “The Week On-Chain” concludes.

“Short-Term Holders however are of greater interest, with 88.3% of their held supply (2.26M BTC) now held at an unrealized loss. This is compounded by an acceleration in STH realized losses being sent to exchanges, as well as the loss of key technical moving average support, putting the bulls on the back-foot.”

<em>Bitcoin % LTH balance sent to exchanges chart (screenshot). Source: Glassnode</em>

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.