As an experienced analyst, I believe that the recent correction in the crypto market, specifically Bitcoin (BTC), is causing significant distress for new investors who entered during the early-year bull run. The data from Glassnode shows a surge in “realized losses” and a large number of short-term holders are now underwater, leading to panic selling.


Over the past month, the crypto market has experienced a significant downturn, leaving many new investors feeling uneasy due to its volatile swings.

As a researcher studying blockchain data, I’ve uncovered some intriguing insights regarding Bitcoin transactions from the past year. Specifically, I’ve identified approximately 2024 individuals who purchased Bitcoin during the early-year bull market when its price reached new all-time highs. However, current events have caused a reversal in Bitcoin’s price, leading these buyers to sell their holdings at a loss.

Paper Hands Bitcoin Buyers

Based on Glassnode’s analysis, there has been a significant increase in “realized losses” in the past two months, with some of this trend occurring during times of heightened market volatility – including today.

To keep records of losses from selling cryptocurrencies, determine the price at which you disposed of the coins on a given day. Compare this figure to the previous price at which those same coins were transferred. The difference will indicate either a capital gain or loss based on Bitcoin’s current market value relative to when you originally obtained your coins.

The current market downturn sets itself apart from previous ones as it signifies the first significant drop below the short-term average purchase price of Bitcoin for most recent buyers, which stands at $59,600.

In his newsletter on Wednesday, Glassnode’s lead analyst, James Check, stated that “recent purchasers are currently at the highest risk of selling in a panic based on statistical analysis.” This situation arises when an excessive number of coins and holders find themselves underwater, which can significantly impact bullish sentiments.

Is The Bear Market In Effect?

Although losing the mentioned price level is a bearish indication, Check asserts that it doesn’t automatically signal the end of the Bitcoin bull market.

As an analyst, I’ve observed that the open interest in the futures market remains relatively tame given the size of the market. This historical marker has typically signaled market peaks that are frothy. However, my assessment suggests a more spot-price focused market. A significant portion of sell-side pressure last month can be attributed to the Grayscale Bitcoin Trust (GBTC).

Currently, approximately 3.31 million Bitcoin are being held by short-term investors at a loss, which equates to two-thirds of their total holdings.

Several financial experts, including myself, have observed that Bitcoin’s continuous rise in price without experiencing a significant correction, as had occurred during previous bull markets, could indicate an impending price drop.

As an analyst, I’ve observed that Bitcoin’s price had not experienced a decline of over 20% from its peak since the beginning of 2022. In contrast, past bull markets have typically witnessed several drawdowns of 20 to 30%.

“Charles Edwards of Capriole Investment suggested on Twitter that a flush, or significant market correction, would benefit the ongoing bull market. He expressed eagerness for this event to occur as soon as possible to maximize potential long-term investment opportunities.”

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2024-05-01 22:38