Bitcoin (BTC) Short-Term Holders Face Elevated Stress, Reports Glassnode

The
Bitcoin
market
continues
to
experience
downward
pressure,
despite
the
average
Bitcoin
(BTC)
investor
remaining
profitable,
according
to
Glassnode’s
latest
report.
However,
the
Short-Term
Holder
(STH)
cohort
is
heavily
underwater
on
their
holdings,
making
them
a
source
of
risk
in
the
current
market
environment.

Market
Overview

Glassnode’s
analysis
indicates
that
the
average
BTC
investor
is
holding
relatively
small
unrealized
losses
compared
to
previous
cycles,
suggesting
a
relatively
favorable
position
overall.
However,
the
report
highlights
significant
concerns
for
short-term
holders,
who
are
experiencing
elevated
unrealized
losses.

Over
the
last
three
months,
the
Bitcoin
market
has
faced
increased
downward
pressure,
causing
the
largest
drawdown
of
the
current
cycle.
Despite
this,
from
a
macro
perspective,
the
spot
price
is
trading
around
22%
below
its
all-time
high
(ATH),
which
remains
a
relatively
shallow
drawdown
compared
to
historical
bull
market
regimes.

Current
Market
Pressures

With
increased
downward
price
pressure,
assessing
the
unrealized
loss
held
by
investors
is
crucial
for
evaluating
the
financial
stress
they
are
experiencing.
According
to
Glassnode,
total
unrealized
losses
amount
to
just
2.9%
of
the
Bitcoin
market
cap,
which
is
historically
low.
This
suggests
that
the
aggregate
investor
remains
relatively
profitable,
even
with
continued
price
declines.

Glassnode
also
notes
that
the
ratio
between
total
Unrealized
Profit
and
Unrealized
Loss
shows
profits
are
six
times
larger
than
losses.
This
ratio
underscores
the
surprisingly
robust
financial
position
of
the
average
investor,
with
only
around
20%
of
trading
days
seeing
this
ratio
above
the
current
value.

Short-Term
Holder
Concerns

The
STH
cohort,
representing
new
demand
in
the
market,
appears
to
be
shouldering
the
majority
of
the
market
pressure.
Their
unrealized
losses
dominate
overall
and
have
consistently
increased
over
recent
months.
However,
even
for
this
cohort,
the
magnitude
of
their
unrealized
losses
relative
to
the
market
cap
is
not
yet
in
full-scale
bear
market
territory,
more
closely
resembling
the
choppy
2019
period.

Glassnode’s
analysis
shows
that
the
STH
MVRV
Ratio
has
collapsed
below
the
breakeven
value
of
1.0,
indicating
that
the
average
new
investor
is
holding
an
unrealized
loss.
Until
the
spot
price
reclaims
the
STH
cost
basis
of
$62.4k,
further
market
weakness
is
expected.

Investor
Reactions

Assessing
unrealized
losses
provides
crucial
insight
into
the
pressure
that
market
investors
are
experiencing.
Glassnode
supplements
this
analysis
with
the
volumes
of
profit
and
loss
realized
to
better
understand
how
these
investors
are
responding
to
this
pressure.
Realized
profit
has
seen
a
drastic
decline
following
the
$73k
ATH,
indicating
that
a
majority
of
coins
spent
since
then
have
locked
in
increasingly
small
profit
volumes
over
time.

Conversely,
realized
losses
are
elevated
and
trending
towards
higher
levels
as
the
market
downtrend
progresses.
Although
not
yet
at
the
extreme
levels
seen
during
the
mid-2021
sell-off
or
the
2022
bear
market,
the
gradual
increase
indicates
some
fear
creeping
into
investor
behavior
patterns.

Navigating
the
Cycle

During
downtrends,
patience
and
HODLing
become
dominant
market
dynamics.
A
substantial
amount
of
Long-Term
Holder
(LTH)
coins
were
spent
for
profit
during
the
March
ATH,
creating
a
net
overhang
of
supply.
More
recently,
LTHs
have
slowed
down
their
profit-taking,
with
supply
accumulated
during
the
ATH
run-up
gradually
maturing
into
LTH
status.
However,
historical
examples
of
increasing
LTH
supply
usually
occur
during
the
transition
towards
a
bear
market.

Glassnode’s
report
concludes
that
while
Bitcoin
is
residing
only
22%
below
its
ATH,
a
considerably
shallower
drawdown
than
prior
cycles,
the
average
BTC
investor
remains
largely
profitable.
Nevertheless,
the
STH
cohort
continues
to
carry
elevated
unrealized
losses,
indicating
they
are
the
primary
cohort
at
risk
and
the
expected
source
of
sell-side
pressure
in
the
event
of
a
downturn.

Profit
and
loss-taking
activities
remain
light,
suggesting
a
saturation
of
the
current
range.
Critical
metrics
such
as
the
Sell-Side
Risk
Ratio
allude
to
a
potential
for
heightened
volatility
in
the
near
future.

For
more
detailed
insights,
visit
the
[Glassnode
Insights
–
On-Chain
Market
Intelligence](https://insights.glassnode.com/the-week-onchain-week-36-2024/).

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source:
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