Bitcoin’s (BTC) plunge below $50,000 on August 5 led to significant losses for short-term holders, while long-term investors largely held their ground, according to data from CryptoQuant.
Speculators Realize Heavy Losses
The dramatic price drop saw Bitcoin giving up the $50,000 level amid widespread panic triggered by a sell-off in Asian stock markets. The event resulted in BTC/USD losing $20,000 in a single week.
Data analysis from CryptoQuant contributor Cauê Oliveira reveals that the majority of Bitcoin sold during this flash crash came from coins that had been held for less than a week. This category of coins, typically held by short-term speculators, moved over $5.2 billion in a single hour.
Bitcoin spent output age bands (screenshot). Source: CryptoQuant
“In total, in the age ranges up to 1 day and 1 day to 1 week alone, more than $5.2 billion was moved in a single hour,” Oliveira summarised.
Long-Term Holders Stay Resilient
In stark contrast, long-term holders, who are typically more resilient and less likely to sell during market downturns, only realized losses amounting to approximately $600,000 during this period.
“When we delve deeper into the spending pattern, we had about $850 million in loss realization in this downward movement,” Oliveira noted.
Bitcoin short-term holder spent output profit ratio (SOPR). Source: Quinten
“However, only $600,000 was realized by long-term holders. 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.”
The scale of the loss-making transactions was highlighted by Crypto investor and YouTuber Quinten, who cited data from fellow CryptoQuant contributor Axel Adler Jr.
BTC Price Faces Potential Further Decline
Despite a subsequent 10% bounce from its six-month lows, there is caution among traders regarding the future direction of BTC prices. Some are targeting price levels in the $40,000 range.
BTC/USD 1-day chart. Source: TradingView
Arthur Hayes, former CEO of BitMEX, issued a warning to his X followers on August 6, suggesting that the market relief might be temporary. Hayes anticipates further turmoil, especially among over-leveraged traditional finance investors affected by the yen carry trade fallout.
“That was the first wave. Now we wait for bodies of TradFi over-leveraged muppets to surface,” Hayes commented. “Then wave 2 begins. If there is going to be a bailout the market needs to deliver more pain by Friday. Enjoy the respite for the war shall continue.”
