Bitcoin short-term holders face increasing financial pressure

Source Cryptopolitan

Glassnode analytics platform revealed that Bitcoin short-term holders have found themselves under increasing financial pressure amid challenging crypto market conditions. The firm also noted that there was currently a shift towards long-term holder accumulation, with wealth now transferring back towards price incentive investors.

Coin Metrics analytics platform also reported that the share of supply held by long-term holders continued to rise, recently reaching around 63%. The firm argued that the trend highlighted how the virtual currency was “evolving into that of a store of value and reserve asset.”

Bitcoin short-term holders face losses

Glassnode reported that short-term Bitcoin holders were currently facing increased financial pressure in the wake of challenging crypto market conditions. The firm revealed that BTC’s short-term holders have incurred realized losses of $7 billion over the past 30 days. The on-chain platform argued that the run of losses marked the most prolonged loss event of the current market cycle.

Short-term holders’ unrealized losses also intensified, nearing the +2 standard deviation threshold, which is a level that has historically pointed to an increased risk of capitulation. Glassnode also argued that history showed short-term BTC holders were not in the worst position they could be in despite the mounting capitulation risk. Data revealed that current figures remained well below the $19.8 billion and $20.7 billion loss spikes witnessed during the 2021 to 2022 crash.

The analytics firm also argued that losses were still aligned with patterns seen in the middle of previous corrections during bull markets. The firm’s outlook correlated with that of crypto analyst PlanB that Bitcoin is still in the middle of its bullish run.

On-chain data from CryptoQuant indicated that BTC’s Bull Score Index had plummeted to 20, its lowest point in two years. The digital asset is currently exchanging hands at $86K at the time of publication, a 23% drop from its recent all-time high in January.

The digital asset’s corrective phase also initiated a four-month low at $76,000 on March 11. Price rebounds have only occurred when the index climbs above 60. The analytics firm stated that the current low reading signaled that the crypto market is still trapped in uncertainty, where sellers are currently outpacing buyers in momentum.

CryptoQuant also noted that sustained capital outflow from Bitcoin exchange-traded funds was a major contributing factor. The firm reported that more than $4.4 billion had flowed out of spot BTC ETFs since February. Data from SosoValue also indicated that spot ETF behavior shifted last week despite the heavy outflows, with consecutive days of net inflows into spot Bitcoin ETFs.

Long-term Bitcoin holders show signs of bullishness

Glassnode reported that long-term Bitcoin holders have continued to hold large amounts of the digital currency. The firm suggested that there were signs of a “unique market dynamic moving forward.” In a March 18 markets report, the analytics platform stated that long-term holder (LTH) activity remained largely subdued, with a notable decline in their sell-side pressure.

Source: Glassnode Insights. Total supply held by Bitcoin long-term holders.

The Binary Spending Indicator, which determines when LTHs are spending a significant proportion of their holding in a sustained manner, showed a slowdown in long-term holders activity. The indicator also showed that LTH supply was beginning to rebound after several months of decline.

“This perhaps represents a shift in sentiment, with Long-Term Holder behavior moving away from sell-side distribution.”

– Glassnode Insights

Bull market tops are often followed by intense sell-side pressure and strong profit-taking among LTHs, which signals a shift to bearish momentum. Glassnode acknowledged that despite BTC’s drawdown in recent weeks, LTHs continued to hold a large portion of their profits, especially during the current later stage of the cycle. The firm also suggested that Bitcoin long-term holders might still be expecting more price upside later in the year.

On-chain data from CryptoQuant revealed that new BTC whales, addresses holding at least 1,000 Bitcoin, were aggressively accumulating amid market downturn. The firm argued that it signaled strong conviction in the digital asset’s long-term outlook among the new large investors. CryptoQuant’s independent analyst stated on March 7 that the cohort collectively acquired over 1 million BTC since 2024, “positioning themselves as one of the most influential market participants.”

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