According to the latest analysis report released by Glassnode, despite the increasing downward pressure on Bitcoin over the past six months, the total unrealized losses totaled only 2.9% of Bitcoin’s market capitalization, which is at a historical low. This shows that even in the face of continued price declines, overall investors can still obtain relatively favorable profits.
But when the analysis was narrowed to short-term investors, it was found that their unrealized losses have increased rapidly in the past few months, indicating that they are currently the most vulnerable group and will be the main source of selling pressure when the market declines. But so far, the magnitude of unrealized losses for short-term investors relative to market capitalization has not yet entered full bear market territory.
Meanwhile, the short-term holder MVRV ratio has fallen below the breakeven value of 1.0. This shows that the average position held by new investors is at a floating loss. In this regard, Glassnode analysts concluded:
“This tells us that new investors, on average, are holding on to unrealized losses. Generally speaking, further market weakness is expected until spot prices recover to the $62,400 STH cost basis.”
In addition to this, Glassnode analysts further stated that activity to realize profits and losses is still very low, indicating that investors who will close their positions at the current price range have reached saturation, and key indicators such as sell-side risk ratios have also reached saturation. This suggests volatility may increase in the near term.
On the other hand, on-chain data analytics platform CryptoQuant analyzed changes in Bitcoin on-chain transactions and found that when BTC/USD hit a recent all-time high against the U.S. dollar in mid-March, the number of daily active addresses was close to 1.2 million. That number has now fallen to 838,000, and was as low as 744,000 in late August.
CryptoQuant notes that this is the lowest number of daily active addresses since 2021, when Bitcoin was around $45,000:
“A decrease in active addresses means a decrease in overall activity on the Bitcoin network, which also means a decrease in the number of transactions, which may reflect a decrease in interest in using the Bitcoin network during the current market phase.”
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