In a startling revelation for speculative investors, recent research has uncovered that Bitcoin (BTC) panic selling has resulted in losses exceeding $100 million over a span of just six weeks. These findings, grounded in data from an on-chain analytics platform, shed light on the drastic impact of market volatility, particularly concerning short-term holders (STHs).
The fallout from the recent drawdown primarily affected Bitcoin investors who have held their assets for between one and three months. As outlined in the study, many of these investors faced overwhelming panic, leading them to exit the market at a loss. The total amount of losses for this cohort has been pegged at approximately $100 million, illustrating a significant decline in the market sentiment: their holdings have decreased in value, with many now selling “underwater.”
This stark situation is attributed to the current market capitalization (MC) of their Bitcoin holdings being lower than the realized capitalization (RC), which signals that these investors are effectively locking in losses as they cash out. This trend is contributing to increased selling pressure, suggesting that the current market sentiment could further exacerbate downward price actions in the short term.
The data highlights concerning trends, with the cohort’s net unrealized profit/loss (NUPL) score currently at -0.19. This negative score indicates that more coins are being held at a loss than at any point this past year. Furthermore, the trend reveals an alarming negative weekly change in the realized cap—reflecting a pattern that hasn’t been seen in many months.
February represented another challenging month for recent Bitcoin buyers, as BTC/USD experienced a steep decline of up to 30% from its all-time highs recorded in January. This swift downturn has historically led to heavy losses for investors, where panic selling becomes a common reaction amidst fear and uncertainty. On the flip side, large-volume entities continue to exhibit a different strategy, choosing to overlook short-term fluctuations while enhancing their holdings at price levels around $80,000.
Despite the ongoing correction, analysts warn that the situation may indicate a potential longer-term bearish phase—contrary to previous bull market behavior where corrections tended to be short-lived. The current conditions, as noted by experts, suggest a possible shift in market dynamics that could challenge the typical patterns of recovery seen in past bull runs.
