Bitcoin Short-Term Holders Experience Significant Losses
A recent report from Glassnode has revealed that short-term holders of Bitcoin have participated in the most significant loss-taking event since 2022, during the recent market crash.
Short-Term Holders vs. Long-Term Holders
Short-term holders (STHs) are investors who have purchased Bitcoin within the last 155 days. They constitute one of the two primary market segments based on holding time, with long-term holders (LTHs) being the other group.
- Long-term holders are less likely to sell their coins quickly compared to short-term holders.
- STHs are typically more sensitive to market fluctuations and tend to react quickly to fear (FUD) or excitement (FOMO).
Bitcoin Realized Loss for Short-Term Holders
The Realized Loss metric tracks the total loss incurred by STHs through their selling activities. It is adjusted for entities, which are clusters of addresses linked to the same investor.
- Transactions between addresses of the same investor are excluded from the data to ensure accurate loss calculations.
- During the recent market downturn, Bitcoin STH Realized Loss experienced a significant spike, indicating substantial sell-offs at a loss.
Impact of Recent Market Correction
During the recent crash, the value of the Realized Loss indicator reached $595 million, marking the largest loss-taking event for STHs since the 2022 bear market bottom caused by the FTX collapse.
- Only a small fraction of trading days have witnessed a larger daily loss value, underscoring the severity of the correction in dollar terms.
- Historically, sharp spikes in the Realized Loss metric have coincided with local bottoms in Bitcoin’s price, suggesting a potential formation of a new bottom.
Bitcoin Price Update
As of the latest data, Bitcoin is currently trading at around $58,800, showing a 3% increase over the past week.
Hot Take: Analyzing Bitcoin’s Loss-Taking Event
Short-term holders of Bitcoin faced significant losses during the recent market correction, with the Realized Loss metric highlighting a spike in sell-offs at a loss. This event, reminiscent of the FTX collapse in 2022, indicates a high level of panic selling among short-term investors. While the market remains volatile, historical data suggests that such loss-taking events could potentially signal a new bottom for Bitcoin’s price. Investors should exercise caution and monitor the market trends closely to make informed decisions.
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