Long-term bitcoin holders’ losses deepest in two years

Last Updated: 7 June 2022

 

Long-term bitcoin holders are beginning to record losses similar to those of the last bear market. However, analysts at Glassnode expect the pain to remain in the market for the time being and may even get worse. Currently, long-term bitcoin holders – people who have held bitcoin for 155 days or more – are sitting on the biggest losses since March 2020.

Realised losses skyrocket

Based on a measurement of the value of bitcoin sent to the exchanges, Glassnode calculated an accumulated realised loss of more than 0.006 percent of bitcoin’s total market cap. In the graph below, we can see that this is the heaviest loss since March 2020. The deepest peak in the chart was around the end of 2018. At that time, the accumulated losses reached more than 0.015 percent of bitcoin’s total market cap.

If history repeats itself, the losses could continue for some time. During the last bear market from 2018 to 2019, the period of realised losses lasted somewhat longer than we have already seen. At the time, this tough period for bitcoin holders lasted about 12 months, while we are only one month into it now. Glassnode also writes that the current losses are similar to those of previous bear markets, but should last longer to be truly comparable.

Institutional investors remain positive

Despite the continued malaise in the market, professional investors are positive about bitcoin. This is at least according to the latest report from CoinShares, in which researchers write about the capital inflow from professional investors in bitcoin funds. These reached a positive figure of 100 million dollars (about 95 million euros) last week.

What is interesting is the difference between bitcoin and ethereum funds. While bitcoin funds posted a plus of more than $500 million (€475 million) in 2022, Ethereum’s brethren have so far posted outflows of $357 million (€339 million). This suggests that sentiment for Ethereum is currently much lower than for bitcoin.

Over the past 24 hours, the bitcoin price has recorded a loss of 5.92 per cent and for the past seven days a loss of 8.14 per cent. These figures bring the bitcoin price currently to 27,658 euros. Ethereum is doing even less with a loss of 6.76 percent in the past 24 hours and a loss of 12.53 percent in the past week. Ethereum is currently trading at a price of 1,645 euros.

Capitulation imminent?

With the continued decline in the bitcoin price, the market is coming under further pressure. At the time of writing, less than 25 percent of all bitcoin are in the green. That means they are at a loss compared to the last time they switched wallets on the blockchain. Of course, this does not necessarily mean that the owner is actually in the red, but it paints a good picture of the state of the market.

In the above chart from Glassnode, we can see that a similar structure has preceded further declines in the past. If this chart from Glassnode proves to be a good predictor of the future of bitcoin, then we are probably in for one last capitulation.

Author

  • Florian Feidenfelder is a technical analyst with many years trading experience in the stock exchange and crypto markets. He has broad experience in forex trading, coaching, and funds management.

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