Bitcoin’s recent decline has left a familiar trail of pain on-chain. Realized losses have soared to levels not seen since the shock wave of the FTX collapse in late 2022, with short-term holders taking most of the hemorrhage while long-term holders remain largely on the sidelines.
That's a blunt observation from analytics firm Glassnode, which warned of the move with a brief X post and an accompanying graph visualizing the sudden spike in losses from recent buyers. The implication is clear. Rather than long-time holders capitulating, the market stress is concentrated on those who bought in the past few months and are now closing their positions at a loss.
Price trends were consistent with the mood. Bitcoin fell from its all-time high of over $126,000 in October to the low $80,000 range at its steepest moment, a drawdown of about 36%, before swinging precariously between $81,000 and $92,000.
At the latest price, Bitcoin is trading in the low $90,000s, reflecting the market's continued struggle to find stable footing amid reduced liquidity and temporary deleveraging across futures markets. These price movements helped create large, short-term spikes in realized losses visible on Glassnode's charts.
The on-chain breakdown shows asymmetry. Short-term holders (STH), as defined by Glassnode, are addresses that have typically held a coin for less than approximately 155 days, but are currently holding a large portion of the supply at a loss, a level not seen since the capitulation of the FTX era. Long-term holders (LTH) largely avoid panic and keep their unrealized losses much smaller in comparison.
This move is important because if recent buyers are leading the bulk of the selling, it signals a liquidity and sentiment-driven correction rather than a fundamental change in demand from patient long-term investors. This also means that the path to a cleaner bottom may continue through an extended period of retail and momentum unwinding, rather than a single systemic failure.
What do you expect?
Market participants and analysts are divided on what will happen next. Some on-chain watchers have warned that the surge in realized losses and diluted liquidity profile indicates a vulnerable late-cycle stage where further shocks could reignite the sharp decline. Exchange liquidations and increases in short-term realized losses have historically been associated with increased volatility, with several experts recently noting that liquidation events exceeded the $1 billion level during the worst of the decline.
At the same time, many institutional desks remain bullish on the long term. For example, JPMorgan cites a model that compares Bitcoin's performance to gold on a volatility-adjusted basis and argues that Bitcoin's performance still has the potential for significant upside in the coming months. The tension between short-term vulnerability and a long-term bullish narrative is making traders cautious and opportunistic.
Technically, the market appears to be oscillating between consolidation and panic flashes. Traders closely monitoring futures and options flows have pointed to deleveraging in derivatives markets and defensive positioning in options as signs that professional liquidity providers are reducing risk, which tends to compress volatility ahead of the next leg of a directional move.
For now, the key price levels remain the October high, which is the obvious benchmark for bulls, and the $80,000 area that acted as a trigger during the most recent capitulation. With new inflows from institutional investors and renewed retail confidence, buying returns in these lower bands could reduce realized losses and stabilize the market. Otherwise, the current STH-led selling wave may continue to weigh on spot prices.
What investors should take away from Glassnode's signals is more pragmatic than panicky. A spike in realized losses is a sign of a short-term unwinding, not necessarily a large-scale split in the long-term holder base.
This nuance is important for those deciding whether to exit the market or look for staging points to accumulate. As with Bitcoin, volatility and sudden changes in sentiment are part of the ecosystem. On-chain data only shows who is struggling this time.
