Bitcoin Newbies Panic Sell After Price Crash – Glassnode

The crypto market has faced a massive correction over the past month, and new investors are proving unable to handle the volatility.

Blockchain data shows that 2024 Bitcoin buyers, who entered an early-year bull market that saw Bitcoin (BTC) rise to a new all-time high, are now panic-selling at a loss as that the price of the asset reverses the course.

Paper Hands Bitcoin Buyers

According to Glassnode, “realized losses” on the chain have it increased over the past two months during periods of high volatility, one of which includes today.

Realized losses are tracked by looking at the price at which coins move on a specific day, compared to the last time those specific coins moved. The discrepancy is assumed to represent a capital gain or loss depending on how the current market price of Bitcoin compares to when holders initially acquired their coins.

However, today’s market decline is different from the previous one: it marks the first decisive break below Bitcoin’s short-term holder cost base of $59,600, the break-even point for the new average buyer of Bitcoin.

“These recent buyers are statistically the most likely to panic,” Glassnode principal analyst James Check wrote in a note Wednesday. “It delineates a point where there are too many coins and headlines underwater, which can be a deal breaker for bullish sentiment.”

Is the bear market in effect?

While it’s definitely a bearish sign, Check says that losing that price level doesn’t necessarily mean that Bitcoin’s bull market is over.

For example, open interest in the futures market still does not appear excessive compared to market size, which is a historical indicator of frothy market tops. Rather, the market appears more point-oriented, with much of the selling pressure in the past month stemming from the Grayscale Bitcoin Trust (GBTC).

Currently, short-term holders still have 3.31 million BTC in losses, representing two-thirds of their holdings.

Check and other analysts have noted that Bitcoin was due for a price crash, having gone too long without a significant pullback compared to previous bull runs.

Until today, the price of Bitcoin had not retraced more than 20% from their local highs since 2022, while other bull markets have seen several declines of 20-30%.

“A coloration would also be good to keep the bull market going,” he wrote Capriole Investment founder Charles Edwards on Twitter Wednesday. “The sooner we have one, the better the long-term opportunities.”

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