According to a study, Bitcoin (BTC) speculators are in “panic” mode as almost all of them are in the red.
In the latest edition of its weekly newsletter “The Week On-Chain,” analytics firm Glassnode revealed unrealized losses of 97.5% among short-term Bitcoin (STH) holders.
Research warns of a “non-trivial” decline in sentiment towards Bitcoin
BTC’s price action over the past few months has tested investors’ resolve, but none more so than those who have purchased BTC over the past three months.
STHs, which are entities that hold coins for 155 days or less, have found that their total cost base does not support the market.
As Glassnode notes, as of September 17, the cost basis for non-BTC issuers is now $28,000, about 5% above the current spot price.
As part of its research, the company separated the STH cohort into holders and donors and discovered “a relationship between large changes in implied (unrealized) returns and the change in STH expenditures (realized returns).”
The result, he says, is a “non-trivial change in mood.”
“From this perspective, we can see that the cost basis of issuing STHs fell below the cost basis of holders when the market sold off from $29,000 to $26,000 in mid-August,” explains The Week On-Chain. “.
“This suggests that some level of panic and negative sentiment has taken hold in the short term.”
“A certain level of panic”
The findings are consistent with general caution among Bitcoin traders and analysts, many of whom predict that lower levels have yet to be tested.
However, The opinion is far from unanimous, as optimists expect a turnaround in the development of the BTC price from the fourth quarter.
As Cointelegraph reported earlier this week, the classic sentiment indicator, the Crypto Fear & Greed Index, remains only slightly bearish at current price levels.
However, for STHs, the threat of permanent loss seems all too real.
Glassnode analysts have introduced a trend confidence metric that subtracts the donor’s cost basis from the holder’s cost basis and divides it by the price of BTC.
“The Bitcoin market is experiencing a non-trivial shift in sentiment as almost all short-term holders are now stuck in their supply,” the company wrote in part of its conclusion.
“This has led to a negative shift in sentiment as high-spending investors now have a lower cost base than the rest of the cohort. This suggests there is some level of panic within this group, for the first time since the FTX collapse.”