Bitcoin STH Unrealized Losses Up to 15%: Is This Where the Bleeding Stops?
Bitcoin’s positive start to the new year was threatened on Saturday, January 3, as the cryptocurrency market reacted negatively to the latest military action by the United States in Venezuela. The flagship cryptocurrency briefly lost more than $90,000 after US President Donald Trump announced the capture of Venezuela’s leader, Nicolas Maduro.
While the long-term impact of the recent US military strikes on the cryptocurrency market remains unknown, the price of Bitcoin seems poised to rise in the short term. Interestingly, the latest on-chain data suggests that the leader of the cryptocurrency market is likely to reach a low resolution.
Can Lows Be Made in the Price of BTC?
Crypto analyst Darkfost revealed in a Quicktake post on CryptoQuant that the most active group of Bitcoin investors, known as short-term holders (STHs), have remained under pressure, as the price of BTC rises between the levels of $85,000 and $92,000.
Darkfost shared that short-term holders of Bitcoin have a cost base of approximately $103,000, after calculating the on-chain impact of Coinbase’s recent large BTC transfer. Based on data from CryptoQuant, the average unrealized loss for this group of investors stands at around 15%.
As Darkfost explained in their Quicktake post, this figure was arrived at based on a percentage deviation from the short-term owner’s cost basis. “Using this method makes it possible to identify times when the most active and sensitive investors in the market are under pressure,” said the on-chain analyst.
Source: CryptoQuant
From a historical point of view, when short-term Bitcoin owners see significant declines, and their average unrealized losses stand at around 15%, a low correction structure tends to follow the first cryptocurrency. According to Darkfost, BTC may be looking at a similar situation here.
However, a crypto analyst noted that this signal is false, especially if the price of Bitcoin is at the beginning of an extended bear market. A deep or long bear market can cause STH’s unrealized losses to remain above 15% for a long time or open the door to further distributions.
Bitcoin Price At A Glance
As of this writing, the price of BTC stands at around $91,160, showing a jump of more than 1% in the last 24 hours. According to data from CoinGecko, the flagship cryptocurrency has risen nearly 4% in the past seven days.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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