Summary
- Bitcoin market speculators were purged following August 5 – Black Monday.
- Glassnode reveals $365 million in futures liquidations and the largest unrealized loss since FTX.
- Bitcoin demand is now back in the US market.
August 5 saw a massive equities and crypto wipeout which has been recently addressed by Glassnode. On Monday, August 5, BTC saw its price drop below $50,000 ahead of a rebound.
The analysts noted the massive amount of future liquidations both long and short amongst short-term holders.
These liquidations followed a “correlation-1” type of event mentioned in the analysis – this refers to a financial market situation in which assets that are usually not correlated suddenly start moving in the same direction, achieving a correlation of almost 1.
August 5 affected the Bitcoin markets as well and short-term holders or STHs were severely impacted.
Market Losses Similar to FTX Event
Glassnode addressed the situation of short-term holders, entities who hold BTC for a maximum of 155 days. Long-term holders, on the other hand, hold BTC for more than 155 days.
During conditions of high market volatility, STHs are more sensitive compared to LTHs and this is exactly what August 5 demonstrated.
Glassnode revealed that STHs are currently sitting on the largest unrealized loss since the FTX implosion and this highlights the high levels of stress imposed by market conditions.
Short-Term Holder MRV shows the magnitude of unrealized profit or loss held across the new investor cohort.
According to their notes, 7% of the supply is held in a profitable position which is a similar point to the sell-off in August 2023.
New Investors Lost 10% on Average
Glassnode’s analysis also brought up another metric – the Short-Term Holder SOPR that reached impressive depths, and new investors recorded a 10% loss on average.
There are only 70 trading days ever that have registered a lower value.
Total Futures Liquidations – $365 Million
Glassnode also explained that the total liquidations were $365 million. $275 million were in long positions that were forced to close and $90 million in shorts were also liquidated.
Leveraged speculators were purged from the derivatives market.
Bitcoin Demand Back in the US Market
Following the speculators’ purge from the BTC market, the US is now seeing demand back in, according to the latest data from CryptoQuant’s author IT Tech.
CryptoQuant cites the fact that the Coinbase Premium Index turned positive again, and high premium values could show that US investors now put strong buying pressure on Coinbase.
Regarding Bitcoin’s price today, at the moment of writing, BTC is trading above $57,500 following the Black Monday price drop.