The recent underperformance of Bitcoin has left a significant proportion of investors counting their losses. According to research by analytics firm Glassnode, few have weathered the flash crash to $26,000 lightly. The data shows 88% of short-term holders, classified as those holding onto BTC for 155 days or less, have seen a drastic reshaping of their expected profitability. Among these market participants, only a meagre 11.7% can now claim that their BTC investments are in the green.
This unsettling scenario is largely a consequence of a sudden downturn in the BTC/USD market, an event that has seemingly undermined vast portions of positive market sentiment. Prospective predictions suggest a further drop in price to the region of $25,000.
The impact of last week’s price drop has been most notably felt by the short-term holders, identified as the more speculative end of the Bitcoin holders. Prior to the past week, this group constituted the framework for the BTC trading range and had substantial influence on market prices. However, the breakeven point, known as realized price, for this group is currently floating above $28,500. In contrast, the long-term holders, typically referred to as the hodlers, have shown minimal reactions to the extensive fluctuations in price, with insignificant of their supply being sent to exchanges.
Adding to the concern of the short-term holders, exchange inflows originating from entities in profit and loss have started indicating that this group is becoming increasingly responsive to market movements. With a vast majority now holding their supply at an unrealized loss, this group, sensitive to price changes, seems to be on a backfoot in terms of market advantage.
The situation reveals differing responses from two types of Bitcoin investors – the short-term holders and the long-term hodlers. While the former group is struggling to maintain its investments in a profitable light, the latter group is remaining largely unfazed. This simultaneous yet divergent reaction from the same turbulent market certainly chips away at the often projected certainty of potential profits in the cryptocurrency market.
However, it’s worth noting that the long-term holders have managed to keep their positions fairly stable even in times of market capriciousness. Their strategy may find new advocates among seasoned investors and rookies alike, given their apparent ability to maintain control without resorting to panicky selling in times of volatility.
To sum up, while the ongoing turbulence in the bitcoin market is a cause for concern, it also poses a learning opportunity for the community. It calls for careful investment strategies and a proactive approach to managing risks, as well to rethink whether a short-term or long-term investment strategy is admissible considering individual financial goals.
Source: Cointelegraph
