Short-Term Bitcoin Holders Taking the Brunt of BTC Capitulation: Analytics Firm Glassnode


Crypto research firm Glassnode is looking at fresh Bitcoin (BTC) data to see if the recent sell-off indicates that BTC is just in a slump or entering bear market territory.

In its latest weekly newsletter, Glassnode says that due to the wild price swings commonly seen in the crypto markets, a deeper analysis of the data is required to establish a clear picture of what’s really happening.

“Bear markets are hard to define in Bitcoin, as the traditional 20% drawdown metric would trigger a bear almost every second Tuesday given the volatility. Thus we look to investor psychology and profitability as a gauge of likely, and actualized sell-side activity.

What we identified this week are significant realized losses, a steep drawdown, a return to HODLer-led accumulation, and top buyers taking any opportunity to get their money back.”

The firm notes that Bitcoin has experienced a double-whammy of price drops and sell-offs from short-term holders (STHs).

“Alongside declining prices, investors have capitulated over $2.5 billion in net realized value on-chain this week.

The lion’s share of these losses is attributed to short-term holders who appear to be taking any opportunity to get their money back.”

Source: Glassnode

Digging deeper into the data of STHs selling their Bitcoin at a loss, Glassnode says,

“Coins are considered to be owned by STHs when they are younger than ~155-days and are statistically more likely to be spent in the face of volatility.

The STH-SOPR [spent output profit ratio] metric has accelerated downwards this week, after finding resistance at a value of 1.0 throughout this drawdown.

Psychologically, this suggests that recent buyers are taking exits at, or below their cost basis to ‘get their money back,’ creating sell-side pressure and resistance.

Lower values indicate heavier losses are taken by STHs, who in this instance are disproportionately top buyers.”

Source: Glassnode

Pulling the lens out further, the firm notes that total realized losses were more than $7.57 billion in just a single 7-day period. Glassnode says such a drop mirrors “major capitulation events over the past 12 months.”

Source: Glassnode

In conclusion, Glassnode looks at the impact of Bitcoin losing nearly 50% in valuation since hitting an all-time high above $69,000 in November of last year.

“This is now the second-worst sell-off since the 2018-20 bear market, eclipsed only by July 2021, where the market fell -54% from the highs set in April.

With the bulls now firmly on the back foot, such a heavy drawdown is likely to change investor perceptions and sentiment at a macro scale.

Numerous signals point to a macro scale bear trend in play. … The bulls either need to step up in a big way, else the probabilities favor the bears.

That said, a relief bounce in the near term is also probable if history is to act as a guide.”

Source: Glassnode

At time of writing, Bitcoin is rallying from its weekly lows, up by 4.36% to $37,254.

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