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Bitcoin (BTC) traders are currently in a state of “panic” as nearly all are experiencing losses, according to research findings.
In the most recent issue of its weekly newsletter, “The Week On-Chain,” the analytics firm Glassnode disclosed that 97.5% of Bitcoin’s short-term holders (STHs) are facing unrealized losses.
Research highlights a “non-trivial” decline in Bitcoin sentiment
Recent BTC price movements have tested the determination of investors, particularly those who acquired BTC within the last three months.
STHs, defined as entities holding coins for 155 days or fewer, have seen their overall cost basis fail to provide market support.
According to Glassnode, as of September 17, the cost basis for those not liquidating BTC stands at $28,000 — approximately 5% above the current spot price.
In its analysis, the firm categorized the STH group into holders and spenders, uncovering “a correlation between sudden shifts in implied (unrealized) profitability and changes in spending behavior by STHs (realized profitability).”
The outcome, it states, is what it refers to as a “non-trivial change in sentiment.”
“From this viewpoint, we observe that the cost basis of STHs who are spending has dropped below that of holders as the market declined from $29k to $26k in mid-August,” “The Week On-Chain” elaborated.
“This indicates that a level of panic and negative sentiment has emerged in the short term.”
Bitcoin STH holder and spender data annotated chart (screenshot). Source: Glassnode
“A level of panic”
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The results align with the prevailing cautious sentiment among Bitcoin traders and analysts, with many anticipating further tests of lower price levels.
Related: What volatility? Bitcoin price dismisses FOMC, Mt. Gox with $26.7K dip
However, opinions are not unanimous, as some optimists are looking for a potential turnaround in BTC price performance starting in Q4.
As Cointelegraph reported earlier this week, the traditional sentiment indicator, the Crypto Fear & Greed Index, remains only slightly bearish at the current price levels.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
Nonetheless, for STHs, the risk of permanent loss seems very tangible.
Glassnode analysts introduced a trend confidence metric, which calculates the difference between spender cost basis and holder cost basis, divided by the BTC price.
“The Bitcoin market is undergoing a significant shift in sentiment, with nearly all Short-Term Holders currently underwater on their holdings,” the firm stated in part of its conclusion.
“This has led to a negative shift in sentiment, with investors who are spending now having a lower cost basis than the rest of the group. This indicates that a level of panic is prevailing among this cohort, marking the first occurrence since the FTX collapse.”
Bitcoin new investor confidence annotated chart (screenshot). Source: Glassnode
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This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making any decisions.
