1.1 million novice traders panic-sell, but long-term Bitcoin holders don't care

Reluctant traders are panic selling, but long-term Bitcoin holders have seen this happen before.

While newcomers to the bitcoin market have been panicking and selling at a loss, the recent market slump hasn't bothered veterans.

The price of bitcoin fell to its lowest level in 20 weeks on Monday, May 17, as the market found support near $42,000.

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According to data from on-chain analytics provider Glassnode, the plunge was largely due to novice traders selling while long-term Bitcoin holders held their ground.

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Glassnoded noted that Bitcoin’s Adjusted Spend Output Profit Ratio (aSOPR) fell below 1.0 during Bitcoin’s current decline. aSOPR is a measure of the profit or loss of the last transaction on the Bitcoin chain. An aSOPR of less than 1.0 indicates that cumulative losses have been realized on-chain, most notably by short-term holders (holding Bitcoin for less than 155 days)—traders who bought Bitcoin during the 2021 bull run.

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The total number of addresses holding non-zero Bitcoin balances also fell by 2.8% from the recent all-time high of 38.7 million as more than 1 million traders closed their positions. Glassnode says:

A total of 1.1 million addresses spent all of their Bitcoin holdings during this correction, again proving that panic selling is currently underway.

Volatility in the share of supply held by short-term holders suggests panic selling, Glassnode said, noting similarities between recent supply distribution patterns and those observed during the macro peak of the 2017 bull market. Markets typically find a macro peak when new holders hold a relatively large share of supply.

Total Bitcoin supply held by short-term holders: Glassnode

The amount of bitcoin held by short-term holders recently peaked at 28 percent of bitcoin’s circulating supply, or around 5.3 million bitcoins.

Glassnode estimates that Bitcoin has fallen more than 28% since hitting an all-time high of $63,600 on April 13. This pullback is the deepest correction in this bull market.

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