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Bitcoin ($BTC) is currently in red regarding price performance, dragging the rest of the crypto market along with it. Amid the continuous bearish price action, the latest data has revealed that Bitcoin short-term holders now face losses compared to their initial purchase prices.
Onchain data expert James Check highlighted this in a recent post on X, disclosing that over 80% of Bitcoin’s short-term holders, those holding their $BTC for less than 155 days, have bought their tokens at prices higher than the current market rate.
Underwater Investors, Implication For Bitcoin
This situation of the majority of short-term holders being in the red (at a loss), as pointed out by Check, is quite similar to the scenario that took place in “2018, 2019, and mid-2021, which signaled many investors were at risk of panicking and precipitating a bearish trend.”
Right now, over 80% of #Bitcoin Short-Term Holders are underwater, meaning their coin was acquired at a price above the current spot price.
This is similar to 2018, 2019, and mid-2021 which signalled many investors were at risk of panicking, and precipitating a bearish trend. pic.twitter.com/8jM7PBqh5z
— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) August 19, 2024
Despite the bleak outlook suggested by the high percentage of underwater short-term holders, the implications for the market are nuanced.
Check highlighted that the psychological impact on holders varies greatly depending on the extent of their losses. He elaborates that a minor unrealized loss, such as 1%, has a significantly different psychological effect on an investor than a more substantial loss of 20%.
Despite the high percentage of holders facing losses, the total unrealized loss across the market equates to only 4% of Bitcoin’s total market capitalization. This indicates that while the sentiment may be bearish, the financial impact might not be as severe as expected.
$BTC Market Performance And Outlook
Bitcoin has continued to gradually plunge towards the downsides, breaking multiple supports. Over the past week, the asset has declined by 1.7% and further down by 2.7% in the past day.
This bearish performance has brought the asset to trade as low as $57,918 earlier today before now, retracing slightly to trade at $58,339 at the time of writing. Interestingly, despite the decline, $BTC’s daily trading volume has seen quite the opposite performance.
According to data from CoinGecko, this metric has increased from below $17 billion at the start of today to roughly $22.6 billion.
Regardless, several analysts remain bullish on $BTC, anticipating a rebound soon. Renowned crypto analyst Elsa on X has revealed that Bitcoin’s daily MACD indicator has switched bullish. However, it appears $BTC is “lacking” the liquidity needed to make that push to the upside.
$BTC daily MACD has turned bullish
But still, liquidity is lacking which is needed for a big #Bitcoin pump! pic.twitter.com/snUqfPdFGU
— Elja (@Eljaboom) August 19, 2024
Featured image created with DALL-E, Chart from TradingView