Bitcoin short-term holders face increasing financial pressure
Bitcoin Short-Term Holders Face Mounting Pressure as Long-Term Investors Accumulate
Bitcoin’s market dynamics are shifting as short-term holders experience significant losses, while long-term investors continue to accumulate the cryptocurrency, signaling confidence in its long-term value.
Short-Term Holders Under Financial Strain
Glassnode, a leading blockchain analytics firm, has reported that short-term Bitcoin holders are currently facing increased financial pressure amid ongoing market volatility. Over the past 30 days, short-term holders have incurred realized losses amounting to $7 billion. This marks one of the most prolonged loss periods in the current market cycle.
Additionally, unrealized losses for short-term holders have intensified, nearing the +2 standard deviation threshold—an indicator that has historically pointed to an increased risk of capitulation. However, despite this mounting pressure, Glassnode notes that the current situation is not as severe as previous loss spikes witnessed during the 2021-2022 crypto market crash, where losses reached as high as $20.7 billion.
CryptoQuant data further supports this analysis, showing that Bitcoin’s Bull Score Index has dropped to 20, the lowest level in two years. The cryptocurrency is currently trading at $86,000, reflecting a 23% decline from its January all-time high. On March 11, Bitcoin hit a four-month low of $76,000, emphasizing the current corrective phase. Analysts note that price rebounds have historically occurred when the Bull Score Index surpasses 60, suggesting continued uncertainty in the market.
Another key factor contributing to short-term holder losses is sustained capital outflows from Bitcoin exchange-traded funds (ETFs). CryptoQuant reported that more than $4.4 billion has exited spot BTC ETFs since February. However, recent data from SosoValue suggests a potential shift, with net inflows returning to Bitcoin ETFs over the past few days.
Long-Term Holders Maintain Confidence
While short-term holders are struggling, long-term Bitcoin holders (LTHs) are displaying a different behavior, showing resilience and continued accumulation. According to Glassnode, LTH supply has steadily increased, with a notable decline in their sell-side pressure.
The Binary Spending Indicator, which measures when long-term holders are actively selling their holdings, suggests that selling activity among LTHs has significantly slowed down. This shift in behavior indicates a change in sentiment, moving away from distribution and toward accumulation.
Glassnode analysts argue that bull market tops are typically followed by intense selling from long-term holders. However, despite the recent market downturn, LTHs have held onto their Bitcoin, signaling expectations of further price increases later in the year.
Institutional Accumulation on the Rise
On-chain data from CryptoQuant also reveals that large institutional investors, known as “whales,” have been accumulating Bitcoin aggressively amid the market downturn. Addresses holding at least 1,000 BTC have collectively acquired over 1 million BTC since the beginning of 2024.
This accumulation highlights strong conviction among institutional investors regarding Bitcoin’s long-term outlook. CryptoQuant analysts suggest that these entities are positioning themselves as key market participants, potentially influencing future price movements.
Bitcoin’s Evolution as a Store of Value
The shift from short-term holder capitulation to long-term accumulation underscores Bitcoin’s growing role as a store of value. Coin Metrics recently reported that the share of Bitcoin supply held by long-term holders has reached 63%, further supporting this narrative.
As market conditions continue to evolve, the divergence between short-term holder losses and long-term investor accumulation may play a crucial role in shaping Bitcoin’s future price action. Whether the current market correction leads to a full-fledged recovery or further volatility remains to be seen, but one thing is clear—long-term investors remain confident in Bitcoin’s potential as a reserve asset.