Periods of market decline are not uncommon during times of global stress and upheaval. Recently, both traditional equities and digital assets took a hit as the yen-carry trade unwound, leading to market deleveraging. The US treasuries surged amidst fears of a recession, causing bitcoin to drop by 32% from its all-time high, marking the most significant decline of the current cycle.
Short-term holders of bitcoin have been hit the hardest by this recent drop. Despite a slight recovery above $57,000, data from Glassnode shows that short-term holders are facing their largest unrealized losses since the FTX collapse. This indicates significant investor stress in the current market conditions, with only 7% of the bitcoin supply held in a profitable position.
The sell-off resulted in approximately $1.38 billion in realized losses, making it the 13th largest event in history in USD terms, according to Glassnode. Interestingly, 97% of these losses were borne by short-term holders, while long-term holders remained relatively unaffected.
Investors reacted with panic and fear, selling bitcoin below their acquisition prices. The Short-Term Holder SOPR also plummeted to record lows, with new investors facing an average loss of 10%. This suggests a form of capitulation, with very few trading days ever recording a lower value.
Despite the market decline, bitcoin whales have continued to accumulate significant amounts of the crypto asset. Over 404,448 BTC, worth $22.8 billion, has been moved to permanent holder addresses in the past month. This accumulation trend was noted by CryptoQuant’s Ki Young Ju, who believes that entities like traditional finance institutions, companies, or governments may announce significant bitcoin acquisitions in Q3 of 2024.
In conclusion, while short-term holders are struggling in the face of the recent market drop, bitcoin whales are taking advantage of the lower prices to accumulate more of the digital asset. The market conditions remain uncertain, but there are signs of potential future growth and investment opportunities for those who can weather the current storm.