Bitcoin Price Dip Means Big Paper Losses for Short-Term Holders: Glassnode Data

• STHs now hold unrealized losses near $30K per percent, a key threshold in past cycles.
• Glassnode data signals STH capitulation as losses hit historically significant levels.
• Market bottoms often followed STH losses breaching this critical profitability level.

Bitcoin’s Short-Term Holders (STHs) face their biggest paper losses since past bear markets due to recent price drops. Glassnode data shows these holders are down ~$30,000 for every 1% Bitcoin falls – echoing historical market bottoms and capitulation events, which goes on to show that many recent Bitcoin buyers are underwater.

Historically, this situation often triggers panic selling and sharp market swings, making traders question if this is a deep correction or the start of a reversal.

How Are Long-Term Bitcoin Holders Doing?

Long-Term Holders (LTHs), holding Bitcoin over 155 days, generally remain profitable with minimal paper losses now. But risk is brewing: investors who bought near previous highs are becoming LTHs.

If Bitcoin’s price keeps falling, these newer, high-cost-basis LTHs could face major losses. Historically, this group feeling significant pain often signaled deeper bear market trouble and instability ahead.

What Could This Mean for the Market Now?

The current pressure on STHs suggests selling could intensify soon. History shows these periods bring more volatility, but can also mark market bottoms. Overall market sentiment does remain weak, however.

While not confirming a bear market, the data shows stress on newer investors. Negative macro factors, regulations, or slower ETF inflows could push BTC prices lower. Yet, history shows recovery from such phases remains possible.

Past cycles (2015, ’18, ’22) also show LTHs often took big hits after retail panicked and sold off completely. That key pattern raises the chance of a delayed second downturn, especially if the economy struggles or overall market mood stays sour.