- Bitcoin is stuck in a lengthy consolidation after 2024 halving
- Short-term holders face significant unrealized losses
- With a declining cost base, younger investors are seeing net outflows
- Despite the challenging situation, new investors remain optimistic
Bitcoin price is stuck in a lengthy consolidation phase after the 2024 halving, and although the market gradient is negative, the realized price gradient remains positive.
Short-term holders (STH) who have held Bitcoin for less than 155 days are experiencing this negative market gradient, but it is important to note that 2024 losses are lower than they were in March 2020.
The cost base for STH who have held Bitcoin for 1 week to 1 month is lower than those who have held for 1-3 months, indicative of capital outflows, yet optimism remains about Bitcoin’s price potential as long as it remains above the 200-day moving average at $63,900.
More About Bitcoin Price Dynamics
After halving 2024, we are seeing the bitcoin price stuck in a long consolidation phase, comparable to what we haven’t seen since 2019-2020.
Short-term holders (STH), namely those who have held BTC for less than 155 days, experienced the market gradient turn negative while the realized price gradient remained positive but trended lower.
According to a Sept. 25 statement from Glassnode analysts:
“This indicates that the downside in the spot price was more aggressive than the intensity of capital outflows.”
To elaborate, STHs that have held Bitcoin for one week to three months are playing a big role in this prolonged consolidation, having been under financial pressure since June 2024, incurring increasingly large unrealized losses.
“Despite many new investors being underwater on their holdings, the magnitude of their unrealized losses are notably less severe than the mid-2021 sell-off and the March 2020 COVID-19 crash.”
This in turn leads to a prolonged contraction mode in which the cost base of young investors depresses the spot price and according to Glassnod “has been characterized as a net outflow of capital from the Bitcoin ecosystem.”
As a result, investors who purchased bitcoin in one week or month are spending less than those who purchased one to three months, and according to Glassnode this is an indicator that “a sustained market reversal may be in the early stages of developing positive momentum.”
This could mean that the period of price consolidation and net outflows is a short-term phenomenon, and new investor confidence in the market remains “remarkably strong, which inspires optimism.”
Glassnode also provided data showing the difference between the cost basis of new investors who are spending (orange line in the chart below) and the cost basis of all new investors (blue line).
This may show that STH after unrealized losses are low compared to the value of their holdings or in other words, that bearish sentiment is weaker than bullish sentiment.
“This rally could achieve technical significance if the price also holds above the 200-day moving average at $63.9K.”
Conclusion
We may see that confidence in Bitcoin is high, even when some intervals say otherwise, given the pressures that are still not winning yet.
This is more than understandable because the whole world is talking about how unprecedentedly fast Bitcoin adapts to the world’s key economics and technological sectors.
Its strategic value is no longer being talked about explicitly by crypto enthusiasts alone as it was even a few years ago, and that has a big impact on how bearish sentiment is retreating where a couple of years ago it probably would have won.
However, remember that the mood of most market participants, except for the key ones, can be very fickle and can also spring surprises at any moment.
