Bitcoin (BTC) speculators are in “panic” mode as nearly all of them are in the red, research says.
In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode revealed 97.5% unrealized losses among Bitcoin’s short-term holders (STHs).
Research warns of “non-trivial” Bitcoin sentiment slide
BTC price action in recent months has tested the resolve of investors, but none more so than those who bought BTC over the past three months.
STHs, which correspond to entities hodling coins for 155 days or less, have seen their aggregate cost basis fail as market support.
As Glassnode notes, as of Sep. 17, the cost basis for those not spending BTC is now $28,000 — around 5% above current spot price.
As part of its research, the firm separated the STH cohort into holders and spenders, discovering “a relationship between abrupt changes in implied (unrealized) profitability and the shift in spending by STHs (realized profitability).”
The result, it says, is what it calls a “non-trivial change in sentiment.”
“From this perspective, we can see that the cost basis of STHs who are spending fell below the cost basis of holders as the market sold off from $29k to $26k in mid-August,” “The Week On-Chain” explained.
“This suggests a degree of panic and negative sentiment has taken hold in the near term.”
“A degree of panic”
The findings chime with the overall sense of caution among Bitcoin traders and analysts, with many predicting a test of lower levels still to come.
Opinion is far from unanimous, however, as optimists eye a change of fortunes for BTC price performance beginning in Q4.
Nonetheless, for STHs, the threat of permanent loss appears to feel all too real.
Glassnode analysts unveiled a trend confidence metric, which subtracts spender cost basis from holder cost basis and divides by the BTC price.
“The Bitcoin market is experiencing a non-trivial shift in sentiment, with almost all Short-Term Holders now underwater on their supply,” the firm wrote in part of its conclusion.
“This has resulted in a negative shift in sentiment, with investors spending now having a lower cost basis than the rest of the cohort. This suggests a degree of panic is dominating this group, which is the first time since FTX collapsed.”
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