- Despite recent downturns, long-term Bitcoin holders are still in profit, while Short-Term Holders (STHs) face significant losses.
- Bitcoin is trading about 22% below its all-time high, with a decline in investor sentiment over the past six months.
- Unrealized losses make up just 2.9% of Bitcoin’s market cap, indicating most investors remain profitable.
Despite recent downturns, Bitcoin investors remain profitable, although Short-Term Holders (STHs) face significant losses. Recent analysis highlights this divide, showing that while long-term holders continue to fare well, those who entered the market more recently are struggling.
Recent data from Glassnode reveals a stagnation in Bitcoin’s price and a marked decline in investor sentiment over the last six months. The market has recently experienced its most significant drawdown of the cycle, with Bitcoin trading about 22% below its all-time high (ATH). However, this drop is relatively mild compared to historical bear markets.
Looking at the broader market, unrealized losses are notably low, comprising just 2.9% of the total Bitcoin market capitalization. This indicates that the average investor remains in profit despite the ongoing price decline.
A closer look at the ratio of unrealized profits to losses supports this, showing profits are still six times greater than losses. This ratio has been higher on about 20% of trading days, underscoring most investors’ relatively stable financial position.
Bitcoin Short-Term Holder Struggles
In contrast, STHs, who represent the new market entrants, are bearing the brunt of the current market pressure. Their unrealized losses have been increasing significantly over the past few months. Despite this, their losses are not yet at bear market levels but rather resemble conditions from the choppy period of 2019.
The STH Market Value to Realized Value (MVRV) Ratio has fallen below 1.0, reflecting a general unrealized loss among new investors. This trend will continue until Bitcoin’s price recovers to the STH cost basis of around $62,400.
Further analysis of STHs reveals that all segments within this group hold losses. The average cost basis for various holding periods ranges from $59,000 to $65,200, indicating widespread financial strain among recent buyers.
Examining investor reactions, realized profits have dropped sharply since Bitcoin’s peak at $73,000, while realized losses are climbing. Although these loss-taking events haven’t reached the extremes of previous downturns, they suggest growing apprehension among investors.
The Sell-Side Risk Ratio, which measures the balance between realized profit and loss, is currently low, hinting at a market nearing equilibrium but also potentially poised for increased volatility.
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