Cryptocurrency markets are in a volatile moment, with short-term holders of Bitcoin reportedly feeling “a degree of panic” as almost all are neck-high in unrealized losses. According to recent findings from analytics firm, Glassnode, about 97.5% of Bitcoin’s short-term holders are facing losses. This group, defined as individuals and entities holding coins for 155 days or less, are grappling with a slide in market support that has seen their aggregate cost basis going under. Interestingly, this does not just affect holders, but spenders too.
Glassnode’s investigation into the matter shows that sudden changes in implied profitability might well be causing shifts in how much these short-term holders are spending. For Bitcoin, this translates into a discernible change in market sentiment. In fact, it was found that the cost basis of those holding and spending Bitcoins fell below the cost basis of just the holders when the market dipped from $29k to $26k in mid-August. Consequently, this group appears to be dominated by a sense of panic and negative sentiment.
Yet, while Bitcoin traders and analysts are exercising caution, expectations for the future are far from unanimous. While there are whispers of lower levels to come, optimists are looking forward to a change in fortunes for Bitcoin’s price performance in Q4. Another key sentiment metric, the Crypto Fear & Greed Index reveals only a moderate level of bearishness at the current price levels.
However, Glassnode’s research concludes that there’s certainly a noticeable shift in sentiment, tinged with panic. For new investors, potential loss could be an all too real threat. To measure this concern, analysts at Glassnode subtracted spender cost basis from holder cost basis, divided by Bitcoin price, and uncovered a “non-trivial” shift in sentiment.
While this shift and sense of panic might be quite real for the short-term holders and investors, it’s crucial to remember that cryptocurrency markets can be equally rewarding, despite their notorious tendency towards volatility. Investment strategies need to take into account this inherent risk, just as traditional markets also wrestle with uncertainties. Remember, every investment decision should be backed by careful, thorough research. Caution, as they say, is the better part of valor. But so too is understanding the turbulent, yet compelling, dynamics of the cryptocurrency world.
Source: Cointelegraph
