Key facts: Unlike the average BTC investor, short-term investors are in the red. According to Glassnode, the market is in a period of stress. Bitcoin's (BTC) drop to $55,000, its lowest since Black Monday a month ago, exposes a weakness that complicates the continued bullishness of the price. Glassnode, a provider of data and analysis for the Bitcoin market, warns that There is short-term stress among asset investorsThis is because some of them are in unrealized losses due to the price decline in recent months. The currency is trading 23% below the record it reached six months ago. While the average bitcoin investor is still profitable overall, this is not the case for those who entered the market recently. This can be seen in the following graph, which shows the increase in unrealized losses of this group, that is, those who remain unsold.
Unrealized losses of short-term bitcoin investors. Source: Glassnode. “Short-term holders continue to carry high unrealized losses, indicating that they are the main cohort at risk and the expected source of selling pressure in the event of a crash,” Glassnode warns. The reason for this is that they may be motivated by the tension to divest their holdings out of impatience and fear of further declines. Currently, the cost basis of short-term investors, classified as such for holding bitcoin for less than 155 days, is USD 62,400. Until the price of the currency recovers that level, the analyst firm believes that There is an expectation of further market weakness.
Bitcoin price volatility could increase, says Glassnode
For the analyst firm, the possibility of greater selling pressure alludes to a potential for greater volatility in the near futureHowever, for the moment, the market is showing patience, with low profit and loss taking. Although it should be noted that the latter have increased slightly, as shown in the chart.
Realized losses of short-term bitcoin investors. Source: Glassnode. “The gradual upward trend indicates that fear is creeping into investor behavior patterns,” Glassnode believes of loss-taking. This differs, it clarifies, from the average investor who, while maintaining profitability, shows strength in their positioning. According to market players such as the Coinbase exchange, Bitcoin's current weakness is due to the lack of substantial bullish narratives. This is partly attributed to the northern hemisphere summer, a season in which markets tend to fall, as reported by BitcoinDynamic. In line with various projections, the exchange expects that the beginning of autumn this month and the expected interest rate cut in the United States will lead to a better environment for bitcoin towards the end of 2024.