Glassnode: Bitcoin Speculators are in the Red

Most Bitcoin short term holders are in the red and going into panic mode, analytics firm Glassnode wrote in the most recent edition of The Week On-Chain, its weekly newsletter. Their unrealized losses stand at an impressive 97.5%.

Serious Bitcoin sentiment decline

Bitcoin price action has tested traders’ resolve in the last few months, but especially of those who bought BTC in the past three. Short term holders, classified as traders holding BTC for 155 days or less, have seen their aggregate cost basis fail due to lack of market support.

As of September 17, the cost basis for traders holding BTC was $28,000, around 5% higher than the current spot price according to Glassnode. As part of its research, it separated the short term holder group into spenders and holders and found a relationship between sudden changes in unrealized profitability and the change in spending by short term holders (realized profitability).

The newsletter states:

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. This suggests a degree of panic and negative sentiment has taken hold in the near term.

Even lower levels predicted

The findings are in line with the general sense of caution among Bitcoin investors and analysts. Many expect even lower levels in the near future.

Not all optimism is lost. Some expect Bitcoin’s luck to change starting in the fourth quarter of the year. Regardless, the threat of permanent loss seems to feel all too real for Bitcoin speculators.

Glassnode revealed a trend confidence metric, which takes the spender cost basis away from the holder cost basis and divides the result by BTC’s price. The analysts concluded that the Bitcoin market is experiencing a serious shift in sentiment, with “almost all short term holders now underwater on their supply.”