Bitcoin speculators realize $850M losses in sub-$50K BTC price dump

Bitcoin speculators rush for the exit as “diamond hands” sell just $600,000 of BTC at a loss.
Bitcoin speculators rush for the exit as “diamond hands” sell just $600,000 of BTC at a loss.

Bitcoin long-term holders only sold around $600,000 of BTC during the flash crash to $49,500, data shows.

In one of its recent Quicktake blog posts, onchain analytics platform CryptoQuant revealed a startling contrast between Bitcoin (BTC) hodler cohorts.

Bitcoin “diamond hands” sell just $600,000 at a loss

Bitcoin giving up $50,000 on Aug. 5 came as part of a mass panic as Asian stock markets unwound months of gains.

The latest data now shows that BTC sales came as a result as BTC/USD cemented $20,000 in losses in a single week.

Analyzing the age of coins involved in unchained transactions, however, CryptoQuant contributor Cauê Oliveira showed that it was overwhelmingly the “youngest” coins being resold at a loss.

“When we look at the spent output by age range, it is clear that the largest volume of on-chain movements was derived from coins less than 1 week old,” he sumamrized.

Coin “age” refers to the amount of time a given unit of BTC spent dormant before being used in its latest transaction. Traditionally, coins with an age of up to 155 days are linked to short-term holders (STHs) or speculators — those with no history of “hodling” and a focus on profiteering.

“In total, in the age ranges up to 1 day and 1 day to 1 week alone, more than US$ 5.2 billion was moved in a single hour,” Oliveira continued.

Compare that to the behavior of coins already stationary for an extended period; these are likely owned by long-term holders (LTHs), and the contrast in investor mindset is immediately visible.

“When we delve deeper into the spending pattern, we had about US$ 850 million in loss realization in this downward movement,” Oliveira noted.

“However, only US$ 600 thousand were realized by LTHs. The rest was realized by short-term investors. The largest volume is concentrated in investors up to 3 months old, indicating that the price drop is putting pressure on newcomers to capitulate.”
Bitcoin spent output age bands (screenshot). Source: CryptoQuant

The historical significance of the “huge” number of loss-making onchain transactions was also noted by Crypto investor and YouTuber Quinten, who on X cited data from fellow CryptoQuant contributor Axel Adler Jr.

Bitcoin short-term holder spent output profit ratio (SOPR). Source: Quinten

BTC price faces “second wave” of chaos

While BTC/USD has since bounced by more than 10% versus its six-month lows, data from Cointelegraph Markets Pro and TradingView confirms that not everyone believes that the worst is over.

Related: Bitcoin decline is similar to the start of the 2016 bull run — Peter Brandt

As Cointelegraph reported, traders are still eyeing BTC price targets in the $40,000 range.

In a warning to X followers on Aug. 6, meanwhile, Arthur Hayes, former CEO of crypto exchange BitMEX, said that the relief bounce across markets would not last.

“That was the first wave. Now we wait for bodies of TradFi over leveraged muppets to surface,” he wrote, referring to victims of the Japanese yen carry trade thought to form the bulk of the fallout from the week’s Nikkei meltdown.

“Then wave 2 begins. If there is going to be a bailout the mrkt needs to deliver more pain by Fri. Enjoy the respite for the war shall continue.”
BTC/USD 1-day chart. Source: TradingView

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.