Bitcoin speculators are reportedly in a state of panic as nearly all of them are currently experiencing unrealized losses, according to research conducted by Glassnode. The analytics firm revealed that 97.5% of Bitcoin’s short-term holders (STHs), which refers to those holding the cryptocurrency for 155 days or less, have been hit with losses.
The past few months have been particularly challenging for Bitcoin investors, especially those who purchased the cryptocurrency within the last three months. The aggregate cost basis for STHs who haven’t spent their Bitcoin now stands at $28,000, which is around 5% higher than the current spot price.
Glassnode’s research also highlighted a correlation between changes in unrealized profitability and the spending behavior of STHs. The firm termed this relationship a “non-trivial change in sentiment.” The data showed that as the market sold off from $29,000 to $26,000 in mid-August, the cost basis of spenders fell below the cost basis of holders, indicating panic and negative sentiment among short-term Bitcoin holders.
The findings align with the cautious sentiment prevailing among Bitcoin traders and analysts, with many predicting a further decline in the cryptocurrency’s price. However, opinions on Bitcoin’s future performance are divided, and some optimists anticipate a change of fortunes for the cryptocurrency in the fourth quarter of this year.
While the Crypto Fear & Greed Index remains moderately bearish at current price levels, the threat of permanent loss is a significant concern for short-term Bitcoin holders. Glassnode introduced a trend confidence metric that factors in the spender cost basis, holder cost basis, and Bitcoin’s price. The analysis revealed that almost all short-term holders are currently in a negative position, indicating a shift in sentiment and a degree of panic within this group.
It is worth noting that this article does not provide investment advice or recommendations. Investors should exercise caution and conduct their own research before making any investment decisions.
