Bitcoin Short-Term Holders Face Steep Losses Amid Bearish Outlook, Glassnode Reports

Glassnode, a blockchain analytics firm, holds a pessimistic medium-term outlook for Bitcoin. In its latest weekly study, published Monday, the company outlined a bearish scenario for the digital asset created by Satoshi Nakamoto.

On-chain data suggests an increase in selling pressure, with “Bitcoin bulls” confronting “headwinds,” Glassnode stated. Analysts at the firm attributed the crypto market’s somber mood partly to challenges in traditional markets, stemming from macroeconomic and geopolitical concerns.

Should the crypto market downturn persist in the coming days, “the probability of a more sustained ‘bear market’ would increase,” Glassnode added. Bitcoin traded at $37,150 at the time of the article’s writing, marking a more than 45% decline from its all-time high on November 10, 2021.

Glassnode’s pessimism also stems from weak activity on the Bitcoin blockchain. The number of active entities currently sits at the lower bound of a bearish channel, indicating diminishing interest in the network. This trend also highlights that a “long-term investor base” now primarily drives network transactions.

Short-Term Holders More Likely to Sell BTC

Glassnode reported that 219,000 addresses were emptied over the past month, potentially signaling the beginning of a user exodus from the Bitcoin network.

The firm calculated that “short-term holders” – investors who acquired their coins less than 155 days ago – had, on average, purchased their Bitcoins at $47,200. At the time the study was written, with Bitcoin priced at $38,100, Glassnode noted an average unrealized loss of -19.3% for these investors.

A total of 4.7 million BTCs have lost value since their acquisition by current owners. Of this amount, 54.5% are held by “short-term holders,” who are “statistically more inclined to sell their coins,” the company added.

Concurrently, the “Bitcoin Fear and Greed” indicator registered “extreme fear” on Tuesday, with a score of 20/100, down from 25/100 the previous day.

On a more positive note, inactive Bitcoin supply recently reached record levels, with over 60% of circulating BTCs remaining unspent for a year or longer.

Zhu Su, founder of 3AC, offered his perspective on this trend Monday. He suggested that “many people who bought BTC in 2017/2018 had sold at a loss,” and are now “buying back [Bitcoin] every month, regardless of price movements.”