Bitcoins [BTC] decline to the $18,500 price region marked the second lowest low of the bear cycle. According to Glassnode’s latest report, 11.8% of the coin’s supply has been turned into an unrealized loss.
Furthermore, in the last week, the price per BTC rose from the second lowest low of the current bear market ($18,649) to a high of $21,758. However, prices remained within the consolidation range, which Glassnode noted has been so intact for over three months.
Short-term owners see losses
BTC’s price touched the lower parts of the consolidation area in the last week. Glassnode assessed the volume of coins held with an unrealized profit at the highest of $24,500, which turned into an unrealized loss.
A look at the market capitalization realized value for short-term owners (STH-MVRV) revealed worrying data. The values recorded in the current bear cycle have been lower than those recorded during the December 2018 BTC market capitulation.
This, according to Glassnode, indicated that BTC short-term holders are currently experiencing a “historically large degree of financial pain.”
The report further noted that since mid-August, the total percentage of access in losses has increased by 11.8%, to be tied at 48.1%. Glassnode also found that the contribution from short-term owners has been significantly higher than long-term owners.
This, according to Glassnode, suggests “capitulation” among short-term holders in the market. This could also be a corresponding inflow of demand as the price of BTC fluctuated between $24,000 and $18,500 last week.
It further added that the difference in contributions from short-term owners and long-term owners indicates a risk. This is “that a large volume of investor coins (48.1% of the supply) is underwater below $18.5k. In addition, 11.8% of the supply has a cost basis between $18.5k and $24.5k.”
Furthermore, Glassnode measured the profitability of BTC short-term holders by assessing the Short-Term Holder Spent Output Profit Ratio (STH SOPR). This indicator is used to assess the behavior and profitability of investors who are more likely to have recently entered the market.
In its report, Glassnode found that during the market’s rejection of the $24,000 price tag, the STH SOPR equated to a value of one. This indicated that short-term holders were selling their BTCs on a cost basis.
No longer lasts in the long run
Today’s market situation is primarily determined by short-term owners. These holders are “chasing for the best entry price, and what little profit is available for the taking.”
But unlike this category of holders who influence the market in the short term, long-term BTC holders can be in deep water. Long-term holders “have experienced a significant washout already” and are more inclined to let their coins rest.