Bitcoin’s rejection at $20K last week had near-term holders suffering. According to the recent Glassnode report, BTC short-term investors endured substantial unrealized losses. HODLers have been consistent, continuing to hold their balances regardless of market turbulence.
Meanwhile, these holders remained more enticed by lucrative entry & exit prices. Moreover, Glassnode trusts these holders contributed most to the token movement, with a massive concentration around the current market price.
Glassnode discovered a gigantic supply air gap beneath the $18K value area. Meanwhile, the supply gap stretched between $11,000 and $12,000. A BTC price dip beneath the present cycle low would mean several near-term holder token dipping into unrealized losses.
How will that affect the overall market? Glassnode added that such actions might exacerbate decline reflexivity and catalyze another colossal capitulation event.
Near-Term Holders Amidst Prevailing Bear Market
As mentioned above, near-term investors chased lucrative exit and entry levels than retaining their supply. Consequently, these market players had profitability deteriorating as the Bitcoin price plunged further.
Glassnode stated that the continued declines welcome a point where short-term holder tokens remain clustered at spot prices, putting their cost basis in phase with the marketplace.
Short-term Bitcoin holders had their profitability compressed within the past 431 days as the asset prices endured non-stop plunges. Glassnode reported it was the highest duration seen in a bear market since Bitcoin’s launch.
Besides evaluating near-term investor profitability, Glassnode assessed the MRGO (Market Realized Gradient Oscillator) index as it connects to this holder category. That was to gauge the relative shifts in momentum between organic cash inflows and ‘speculative’ value from Bitcoin’s near-term holders.
Assessing the Details
The report reveals three distinct phases. Firstly, there was momentum growth. Meanwhile, the speculative capital surpassed organic cash inflows from short-term holders & Bitcoin price rallies in such situations.
The second phase had the rally triggering price clinching unsustainable highs. Price declines followed this, further leading to the first short-term cohort wash-out. The last had Glassnode predicting the market direction.
The price momentum & capital inflows from near-term holders hit an equilibrium with the BTC price. Though BTC climbed above $20K, it will hardly sustain the upside. Declines will likely emerge sooner.