Data shows that long-term Bitcoin holders now have significantly more supply at a loss compared to May-July 2021.
15% of long-term Bitcoin holders’ supply is now at a loss
According to the latest weekly report from Glassnode, about 30% of the total BTC supply is currently held at a loss.
The “long-term supply” is the portion of the total Bitcoin supply that has not shown any movement since more than 155 days ago.
The other part of the offer belongs to the ‘short-term holders’. This cohort does not last too long and is generally sold before 155 days are up. Active traders usually make up a significant portion of this offering.
Of course, all coins in the Bitcoin STH stock that are older than 155 days are then counted under the LTH stock.
The relevant indicator here is the “profit/loss offer”, which looks at each coin in the chain to see how many coins are currently in profit or loss.
Related literature | Bitcoin Trading Volume Stabilizes at July 2021 Lows as Market Sleeps
The statistic works by comparing the price at which a coin was last moved, with its current value. If the last price was more than it is now, then Bitcoin is being held at a loss right now. Otherwise it is profit.
Here is a chart showing the loss distributions of both the LTHs and STHs.
It seems that the loss distribution is currently quite even between the two categories | Source: Glassnode’s The Week Onchain – Week 16, 2022
As you can see in the chart above, about 15.3% of Bitcoin LTH supply is currently in loss, with STHs also having nearly the same amount in the red at 15%.
During the bear markets of 2018 and 2020, about 35% of LTHs were loss-making at some points, much more than they are now.
Related literature | Ripple CEO Says Bitcoin Tribalism Is Holding Back the Crypto Industry
However, last year’s May-July mini bear period had only half the number of long-term holders holding coins at a loss.
This means that the profitability of the market is currently much worse. While LTHs are unlikely to sell with these losses as they tend to be price insensitive, STHs are more likely to capitulate by 15% if Bitcoin price continues to struggle.
At the time of writing, Bitcoin price is hovering around $42.5k, up 3% over the past week. Over the past month, the crypto has gained 3% in value.
The chart below shows the trend in the price of the coin over the past five days.
The price of BTC seems to have risen in recent days | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com