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On-chain data shows the Bitcoin investors who purchased at the top are capitulating following BTC’s drawdown under the $93,000 level.
Bitcoin Short-Term Holders Have Just Sold Big At A Loss
As an analyst in a CryptoQuant Quicktake post explained, the latest BTC crash has triggered panic among the short-term holders. The “short-term holders” (STHs) are the Bitcoin investors who bought their tokens within the past 155 days.
The STHs include the new investors and traders in the sector, and as such, the cohort is generally considered to represent the weak side of the market. Members of the group that make it past the 155-day cutoff without making a single transaction earn themselves the promotion to the “long-term holders” (LTHs).
As is usually the case, the STHs have been panic selling again after the latest downturn in the price. There isn’t anything special about it, but what can perhaps be notable is what part of the STHs specifically is involved in the selloff.
The indicator that the quant has shared is the “STH Profit Loss to Exchanges,” which tells us about whether the members of this cohort are transferring their coins to exchanges at a profit or loss.
The reason that this metric specifically tracks transactions to exchanges is naturally because investors usually use these central platforms for selling-related activities.
Now, here is the chart for the STH Profit Loss to Exchanges over the last few days:
The value of the metric seems to have registered a red spike recently | Source: CryptoQuant
The above graph shows that the Bitcoin STH Profit Loss to Exchanges has observed a sharp negative spike alongside the cryptocurrency’s drop under $93,000.
This suggests that these investors have been taking a lot of loss-taking. Since the current prices are still higher than the entire history of the asset, the only holders who could sell at a loss would be the top buyers.
Therefore, the red spike in the indicator means some of these late entrants have already decided to capitulate on the asset. A capitulation event has historically led to bottoms for BTC, as capital rotates out of weak hands during them.
It remains to be seen, however, whether the latest STH loss-taking event has been large enough to make a bottom happen for the Bitcoin price or not.
In other news, the diamond hands of the market have also participated in significant selling recently, as data from the on-chain analytics firm Glassnode has revealed.
The trend in the netflow for the BTC LTHs | Source: Glassnode on X
Unlike the Bitcoin STHs, though, the patience of these investors has rewarded them with significant profits, so their selling is different.
BTC Price
Bitcoin had slipped under the $92,000 level earlier in the day, but it seems the coin has seen a minor rebound to $92,600, at least for now.
Looks like the price of the coin has plunged over the past day | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, CryptoQuant.com, chart from TradingView.com
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