The Global Banker

Republished with full copyright permissions obtained from Market Capital Research.

Glassnode’s recent on-chain data reveals a concerning trend for Bitcoin short-term holders (STHs). An overwhelming majority, 83.7% of the STH supply, is currently facing unrealized losses. In this article, we examine the significance of this indicator and delve into the contrasting fortunes of short-term and long-term holders amidst the recent market volatility.

The Percent Supply in Profit Indicator:
The key metric employed to gauge the profitability of Bitcoin holdings is the “percent supply in profit.” This indicator analyzes the on-chain transaction history of each coin in circulation, comparing the price at which it was last moved to the current spot price. By subtracting the supply in profit from 100%, it effectively identifies the percentage of coins carrying unrealized losses, termed the “supply in loss.”

Focus on Short-Term Holder Supply:
While this metric can be employed for the entire supply, our attention is directed towards the short-term holders. These investors have held their coins for less than 155 days. Glassnode’s illustrative chart demonstrates a recent sharp decline in the percent supply in profit for this group, indicating a challenging situation.

The Current State of Short-Term Holder Supply:
Currently, only 16.3% of the short-term holder supply carries unrealized profit, implying that the remaining 83.7% is facing losses. This predicament stems from the recent decline in the value of BTC. The consolidation period preceding the plunge had enticed STHs to participate in buying and trading, resulting in a gain in their cost basis. However, the subsequent plunge led to a drop in prices below their cost basis, thus causing the supply in profit to decrease as well.

Contrasting Long-Term Holder Supply:
Interestingly, the fortunes of long-term holders (LTHs) diverge from those of short-term holders, with their supply profitability actually improving. The LTHs represent investors who purchased their coins at least 155 days ago. Due to the 155-day delay in counting coins for this indicator, the supply from five months ago has recently matured into this cohort. As BTC prices were lower during this period, the LTH supply is currently in profit, leading to an increase in their share of the profitable supply.

BTC Price Surge:
Despite the challenges faced by short-term holders, the overall market sentiment has seen a recent surge, favoring Bitcoin. Over the past 24 hours, the price of BTC has experienced a 4% increase, surpassing the $26,100 mark.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.

The post “Bitcoin Short-Term Holder Supply Faces Unrealized Losses” was published with full copyright permissions obtained from Market Capital Research.