As the cryptocurrency market continues to evolve, recent on-chain data highlights an unsettling trend for Bitcoin’s short-term holders. The latest findings indicate that these investors have become entrenched in a prolonged underwater situation as Bitcoin (BTC) continues to trade below their cost basis.
Bitcoin Short-Term Holders in Choppy Waters
According to insights shared by on-chain analytics firm Glassnode, the Net Unrealized Profit/Loss (NUPL) indicator reveals that short-term holders (STHs) of Bitcoin, those who acquired their coins within the last 155 days, are firmly in a state of net unrealized loss. The NUPL serves as a crucial metric to gauge the overall profit or loss status of Bitcoin investors, providing a snapshot of the market’s sentiment.
As capital stored in BTC experiences fluctuations, the absolute numbers relating to profits and losses are also expanding. This normalization across market cycles is reflected in the NUPL when compared against Bitcoin’s overall market cap. When the NUPL is positive, it signifies that investors are enjoying net unrealized profit. Conversely, a negative NUPL indicates that the collective crowd is operating at a loss, as is the case for short-term holders at present.
A recent chart from Glassnode clearly showcases the troubling trend: the NUPL for Bitcoin’s short-term holders has dipped below zero. This indicates that those who bought into Bitcoin during the recent months are grappling with significant unrealized losses—an unfortunate reality that emerged following the cryptocurrency’s price crash in November.
Despite a modest recovery in December and January, short-term holders have yet to regain profitability even as the market showed signs of stabilization. The path to recovery looks daunting, as Glassnode suggests that Bitcoin needs to transcend the $98,000 threshold to restore profit margins for this investor category.
“A recovery above ~$98K appears to be the minimum threshold required to return this cohort to a net profitable state,” Glassnode articulated in its assessment. Observers are now left to ponder whether the unrealized loss streak will extend in the near future or if Bitcoin will reclaim its cost basis—an essential milestone for many in the community.
While the NUPL provides a glimpse into the unrealized profits and losses for Bitcoin investors, another noteworthy metric, the Net Realized Profit/Loss, sheds light on profits and losses that holders are actively realizing through transactions. In a related discussion, Julio Moreno, head of research at CryptoQuant, noted via a post that the recent 30-day readings of the Net Realized Profit/Loss have turned negative for the first time since October 2023. This shift signifies that loss-taking is currently prevailing over profit-taking during this timeframe, adding another layer of concern for short-term holders.
Current Market Context
At the time of writing, Bitcoin’s price hovers around $90,900, reflecting a decline of over 2% within the last week. As the market continues to navigate these turbulent waters, the outlook for short-term holders will remain uncertain until a significant upward movement occurs in Bitcoin’s valuation.
