Bitcoin short-term holders' unrealized losses emerge as market weak spot: Glassnode
Quick Take
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Short-term bitcoin holders are facing heavy losses, making them the most likely to sell if the market drops further.
The average new bitcoin investor is holding an unrealized loss, which could lead to substantial sell-side pressure in the event of a further market correction, analysts at Glassnode said in a report published Wednesday.
"Until the spot price reclaims the short-term holder cost basis of $62,400, there is an expectation for further market weakness," the analysts said.
Although the total unrealized losses among all bitcoin holder cohorts remain historically low, this week's Glassnode report said short-term holders are an exception and could face significant market pressure.
"The Short-Term Holder cohort, representing new demand in the market, appears to be shouldering the majority of the market pressure. Their unrealized losses dominate overall, and the magnitude consistently increased over the last few months," Glassnode analysts said.
The analysts added that the magnitude of short-term holder unrealized losses closely resembles the volatile 2019 period in bitcoin's price history. The price of bitcoin began that year around the $4,000 mark, peaked during the summer at around $12,000, then ended the year down around $7,000, according to Coingecko data.
Short-term holder MVRV Ratio falls below breakeven point
This week's report said that the short-term holder market value to realized value (MVRV) ratio has collapsed below the breakeven value of 1.0. The analysts said this metric is now trading at levels similar to August 2023, during bitcoin's long recovery rally from around $16,000 after the collapse of FTX in November 2022.
The MVRV metric measures the ratio between the current market value of coins held by short-term investors, those who have held coins for less than 155 days, and their realized value, the price at which they acquired the coins.
The price of bitcoin increased by a muted 0.3% in the past 24 hours to trade at $56,724 at 9:00 a.m. ET. Bitcoin dominance is at 53.7%, and ether dominance is at 13.8%, according to CoinGecko data.
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