Short Term Bitcoin Holders Are Seeing Red After Market Flush Out

Last week’s massive market movement has sent short-term Bitcoin holders back into the red as the asset fell below several key technical indicators. Furthermore, the bear market looks to be lengthening and could be here to stay for a while.

In its Aug. 21 week on-chain report, analytics provider Glassnode revealed that 88.3% of the short-term holder supply, or 2.26 million BTC, is now held in an unrealized loss.

Bitcoin Holders in Pain

Before the year’s largest single-day sell-off last week, Glassnode labeled markets as ‘top heavy.’ This is when significant volumes of spot supply had a cost basis near or above the current price. 

However, a large magnitude of that supply fell into loss during the 10% BTC slump. It noted that  12.8% of the supply, or 2.48 million BTC, fell into an unrealized loss setting a lower low on the metric.

Nevertheless, long-term holders remained “largely unfazed and unresponsive,” it added. This is a “typical behavior pattern of this cohort during bear market hangover periods.”

Furthermore, the move back to $26,000 has dropped Bitcoin back below several key technical indicators. The asset sliced through the 200-day and 200-week simple moving averages. It also plunged below the 50-week exponential moving average but remains above the 1-year SMA, which is at $23,500. 

The report suggested that the cause of the crash was a major derivative deleveraging and flush out, which is a healthy part of market movement. 

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Commenting on market sentiment and social media mentions of “buy the dip,” analytics provider Santiment commented:  

“Even when traders are praying that markets fall so they can get discounted Bitcoin, many feel second thoughts when presented with the actual opportunity to buy the dip.” 

There is also a lot of speculation about BlackRock loading up on BTC at lower prices before its ETF launch. But crypto social media loves its wild rumors. 

BTC Price Outlook 

BTC is trading flat on the day at $26,032 at the time of writing. It took a dip to $25,874 on Monday but quickly recovered. 

Since its big dump last week, Bitcoin has found support at $26,000, where it has been consolidating for the past four days. 

There could be a final flush out to $24,800, a region that analysts have previously eyed and another support area. Markets are unlikely to drop below this level unless something catastrophic happens with Binance. 

Conversely, the approval of a spot Bitcoin ETF could send the asset back to $30,000 quite quickly.