Glassnode: Over 2.8M BTC Held by Short-Term Investors Now Underwater After Recent Price Drop

  • Glassnode highlights the 26% BTC drawdown is moderate by historical standards, yet causing significant unrealised losses for short-term holders.
  • The current cycle mirrors past patterns with steady growth indicating a mature market with less volatility.
  • Despite market pressures, the ongoing accumulation by long-term holders suggests an approaching market bottom.

A report by analytics firm Glassnode said that the recent slump in BTC is the largest in the current cycle with a 26% drawdown.

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Yet, compared to previous cycles this fall is actually rather moderate. Glassnode said this has caused some headaches for short-term HODLers:

This price contraction has put a significant volume of Short-Term Holder Supply into an unrealized loss, with over 2.8m BTC now underwater based on their on-chain acquisition price

Glassnode

“Magnitude of Losses Relatively Subdued in Comparison to Market Size”

The analysts wrote in a recent note that the 2023-24 Bitcoin cycle has mirrored past trends with 18 months of steady growth post-FTX collapse and a stable phase after reaching a US$73k (AU$108k) ETF peak, followed by a significant yet milder correction of over -26% from the all-time high.

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Historical Bitcoin bull market drawdowns, Source: Glassnode

While short-term Bitcoin holders are currently facing significant pressure, the extent of losses they have incurred is relatively modest compared to the overall market size, Glassnode wrote.

They said “substantial growth from January 2024” meant BTC volume by short-term holders spiked due to strong demand from the launch of spot ETFs. This demand levelled off by Q2-2024, creating a balance between supply and demand that has shifted to a supply overhang, the analysts said.

Bitcoin supply by short-term holders, source: Glassnode

During sustained bull markets, local bottoms are commonly established after the volume of Short-Term Holder supply held in loss saturates around 1m to 2m BTC.

Glassnode

Data Points to Fastest Whale Accumulation Since 2023

Meanwhile, analysts at CryptoQuant said data shows that long-term holders are increasing their stakes.

They pointed to data which indicates that Bitcoin’s long-term holders are significantly increasing their investments, with a 6.3% monthly growth in stakes – the fastest since April 2023. This rise in investment reflects strong confidence in the sector, despite external pressures like government liquidations and past exchange issues.

Bitcoin whale holdings, source: CryptoQuant

The analysts added that the market remains resilient, with major purchases by Bitcoin whales stabilising prices around US$58k (Au$85.8k) to US$59k (AU$87.3k) down from a June peak of US$71k (AU$105k).

Related: German State Continues Selling BTC, Has Now Sold Almost 75% of Its Total Supply

Ongoing accumulation suggests a nearing market bottom, promising potential future price rises and reinforcing a positive outlook for Bitcoin’s stability and growth, they concluded.

Aaron Feuerstein
Author

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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