Bitcoin (BTC) Short-Term Holders See Market Value-to-Realized Value (MVRV) Ratio Collapse Below Breakeven

The sharp decline in the price of Bitcoin (BTC), the world's largest cryptocurrency, has taken a heavy toll on short term holders. Recent reports have revealed that many of these BTC holders are now in the red

The recent sharp decline in the price of Bitcoin (BTC) has taken a heavy toll on short term holders, with many now in the red after buying BTC at higher prices and suffering losses from the cryptocurrency’s price crash, recent reports have revealed.

Short-Term Holders Feeling the Heat

On September 4, Glassnode, an on-chain market intelligence platform, released a detailed report on the financial strain short term Bitcoin holders are currently experiencing.

According to the report, short-term holders are now holding Bitcoin at a significant loss, presenting a potential risk source. In the broader market, however, unrealized losses remain historically low at just 2.9% of BTC’s total market capitalization. This indicates that the aggregate investor is still showing a net profit despite the market decline, with total Unrealized Profit being 6X larger than Unrealized loss.

Nonetheless, recent buyers of Bitcoin, categorized as short-term BTC holders, are bearing the brunt of the market decline and majority of the pressure. Their Unrealized loss is notably larger in the overall market and continues to grow. However, this situation is not yet at the level of a full bear market, which was observed during previous market crashes. The losses are instead mirroring a more turbulent period, like that seen in 2019.

These market observations are drawn from an evaluation of the Short Term Holder Market Value To Realized Value ratio (STH MVRV). According to Glassnode, the STH MVRV of Bitcoin has crashed below the breakeven value of 1.0, currently trading at levels last seen in August 2023, when the market was recovering from the FTX failure.

This assessment suggests that the average new BTC investor is sitting on an unrealized loss, and Glassnode has predicted further weaknesses in the already declining market until the price of Bitcoin surpasses the $62,400 mark.

Currently, all age bands and segments within the short-term holder group are experiencing unrealized losses, indicating widespread stress among short-term Bitcoin investors in the crypto market.

A Deep Dive Into The Bitcoin Market

Glassnode’s report provides a deep analysis of the current state of the Bitcoin market, particularly in terms of price movements, invested sentiment, and overall market behavior.

Over the past six months, Bitcoin’s price action has been largely flat, with many investors showing a lack of interest or becoming apathetic. In the last three months, however, the market has experienced more downward pressure, resulting in a significant price drawdown in BTC. Though compared to historical bull market regimes, this decline is relatively smaller than past bear markets.

Glassnode also revealed that Realized Profit has dropped drastically since Bitcoin’s all-time high of above $73,000 in March 2024. This suggests that fewer Bitcoins are being sold at a profit, while Realized Losses are increasing as the market continues to decline.

Bitcoin’s Sell-Side Risk Ratio is also currently very low, implying that most assets being traded are close to their breakeven cost. This indicates that the current market could be saturated in terms of profit and loss taking, hinting at the possibility of more volatility in the future.

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