Despite the average Bitcoin investor remaining in a profitable position, those who have recently entered the market or acquired Bitcoin in the last six months are facing substantial unrealized losses. This dynamic creates a potentially volatile situation that could impact the broader crypto market.
“The Short-Term Holder cohort remains heavily underwater on their holdings, making them a source of risk for the time being,” a report by blockchain intelligence firm Glassnode states. This group’s financial stress is evident in key metrics, with their unrealized losses dominating the overall market picture.
The report cautions that this overall stability could be disrupted if short-term holders decide to exit their positions en masse. The $51,000 price level is identified as a critical support that must be maintained to preserve the current market structure.
The average cost basis for these investors ranges from $59,000 to $65,200, significantly above the current market price.
This situation is reminiscent of the choppy market conditions seen in 2019, rather than a full-scale bear market, the report’s authors noted. However, it still presents a considerable risk.
“Until the spot price reclaims the STH [Short-Term Holder] cost basis of $62.4k, there is an expectation for further market weakness,” the report stated.
The implications of this stress on short-term holders extend beyond their individual positions. Their potential selling pressure could trigger broader market volatility, especially given the current low levels of overall profit and loss-taking activities.
Interestingly, while short-term holders grapple with losses, long-term investors appear to be in a more stable position.
The report indicates that long-term holders have slowed their profit-taking activities, and coins accumulated during the recent all-time high run-up are gradually maturing into long-term holdings.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
