Bitcoin (BTC) is currently experiencing a decline in price performance, causing a ripple effect throughout the crypto market. Amidst this persistent bearish trend, recent data has shown that short-term holders of Bitcoin now face losses in comparison to their initial purchase prices.
Onchain data analyst James Check spotlighted this phenomenon in a recent post on X, revealing that over 80% of Bitcoin’s short-term holders, defined as those holding their BTC for less than 155 days, have bought their tokens at prices higher than the current market rate.
This scenario, where the majority of short-term holders are in the red, mirrors past market environments in 2018, 2019, and mid-2021. Check noted that during those periods, a significant number of investors exhibited panic behaviors, potentially spurring further bearish trends.
Despite the concerning high percentage of short-term holders facing losses, the market implications are complex. Check pointed out that the psychological effect on holders varies depending on the extent of their losses. For instance, a minor unrealized loss of 1% affects investor sentiment differently than a more substantial 20% loss.
Currently, the total unrealized loss across the market accounts for only 4% of Bitcoin’s total market capitalization. This suggests that while sentiment may be bearish, the financial ramifications might not be as dire as anticipated.
Bitcoin has continued to slide downward, breaking multiple support levels. Over the past week, the asset has decreased by 1.7% and has further dropped by 2.7% in the past day. This downward trend saw BTC trade as low as $57,918 earlier today before a slight recovery to $58,339 at the time of writing. Curiously, despite the price decline, BTC’s daily trading volume has seen a significant uptick, rising from below $17 billion at the start of the day to approximately $22.6 billion, according to CoinGecko data.
Despite the downturn, several analysts maintain a bullish outlook on BTC, predicting an imminent rebound. Notably, renowned crypto analyst Elsa on X highlighted that Bitcoin’s daily MACD indicator has turned bullish. However, she pointed out that the liquidity required for a substantial Bitcoin surge is currently lacking.
