Data shows Bitcoin long-term holders hold significantly more supply in loss right now compared to May-July of 2021.
As per the latest weekly report from Glassnode, around 30% of the total BTC supply is being held at a loss at the moment.
The “long-term holder supply” is the part of the total Bitcoin supply that hasn’t shown any movement since more than at least 155 days ago.
The other part of the supply belongs to the “short-term holders.” This cohort doesn’t hold for too long and generally sells before 155 days are up. Active traders usually make up a significant portion of this supply.
Naturally, any coins in the Bitcoin STH supply that age beyond the 155-day mark are then counted under the LTH supply.
The relevant indicator here is the “supply in profit/loss,” which looks at each coin on the chain to see how many coins are in profit or loss right now.
Related Reading | Bitcoin Trading Volume Stabilizes At Lows Of July 2021 As Market Sleeps
The metric works by comparing the price a coin was last moved at, to the current value. If the last price was more than now, then the Bitcoin is being held in loss at the moment. Otherwise, it’s in profit.
Now, here is a chart that shows the loss distributions of both the LTHs and the STHs.
Looks like the loss split is quite even between the two categories right now | Source: Glassnode's The Week Onchain - Week 16, 2022
As you can see in the above graph, around 15.3% of the Bitcoin LTH supply is in loss currently, with STHs also having almost the same amount in the red at 15%.
During the 2018 and 2020 bear markets, about 35% of the LTHs were in loss at some points, much more than right now.
However, the May-July mini-bear period of last year had only half as many long-term holders holding coins at a loss.
This means that the market profitability is in a much worse place at the moment. While LTHs are unlikely to sell with these losses as they are price insensitive usually, the STHs at 15% are more probable to capitulate if the Bitcoin price continues to struggle.
At the time of writing, Bitcoin’s price floats around $42.5k, up 3% in the last week. Over the past month, the crypto has gained 3% in value.
The below chart shows the trend in the price of the coin over the last five days.
The price of BTC seems to have been climbing up over the past few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com