TL;DR
- $100M Losses: Bitcoin speculators lost over $100M in six weeks as panic selling took hold.
- Market Capitulation: Bitcoin’s price drop caused the market cap to fall below the realized cap, leaving many investors underwater.
- Heightened Selling Pressure: Declining NUPL scores and steep drops indicate widespread capitulation following a 30% drop from recent highs.
Bitcoin speculators have collectively lost over $100 million in just six weeks due to panic-driven selling, according to new research from on-chain analytics firm CryptoQuant. The data reveals the extent of recent capitulation among short-term Bitcoin holders (STHs), particularly those who acquired BTC within the last one to three months.
Short-Term Holders Exit at a Loss
The latest analysis shows that this group of investors suffered significant losses as Bitcoin’s price pulled back from its recent highs. CryptoQuant estimates that this specific STH cohort is now approximately $100 million underwater, having bought BTC at higher prices and sold at a loss.
“This represents a significant reduction in the value of Bitcoin held by this cohort, who are now underwater as many bought at higher prices and are exiting with losses,” CryptoQuant contributor Onchained wrote in a March 13 Quicktake blog post.
Market in an Oversold Zone
Diving into the nitty-gritty of Bitcoin economics, the publication took a close look at the market cap and realized cap of Bitcoin holders. By comparing the current value of their holdings to the prices at which they last moved their BTC on the blockchain, the analysis painted a sobering picture. The findings reveal that market capitalization has dipped below realized capitalization, indicating that many investors have begrudgingly accepted losses.
“Even without an additional sharp decline, the market has already been sufficiently lightened, making it a favorable zone for a potential upward move without the need for further significant drops,” the report stated.
Increased Selling Pressure
The trend has contributed to increased selling pressure, which could further impact Bitcoin’s price in the short term. A CryptoQuant chart accompanying the report showed a sharp decline in the realized cap, marking one of the steepest negative weekly shifts in months.
Additionally, the Net Unrealized Profit/Loss (NUPL) score for these investors has dropped to -0.19, meaning more BTC is currently being held at a loss than at any other time in the past year.
The latest downturn comes after Bitcoin’s 30% drop from its all-time high in mid-January, adding to the challenges faced by Bitcoin speculators. Market corrections during bull runs often lead to panic-driven selling, with many short-term investors cutting losses prematurely.
