Bitcoin posts its lowest weekly close since August as short-term holders move into loss

• Below $75,000, Bitcoin registered its weakest weekly close since August following an increase in selling pressure over the weekend.
• With Bitcoin's realised profit-to-loss ratio falling to -0.63, short-term holders moved into unrealised losses.
• At $37 billion, futures open interest stayed high even as long positions were liquidated and market exposure contracted.

A drop below $75,000 on Tuesday followed Bitcoin's (BTC) lowest weekly close since August, with selling pressure leaving recent buyers nursing losses.

Bitcoin's continued decline adds to short-term holders' losses

As realised losses rise relative to profits, short-term holders (STHs) are nearing their break-even levels, according to Monday’s Glassnode Market Pulse. For investors who purchased Bitcoin during the recent recovery, this points to increasing pressure as the price falls further.

Over the past seven days, the share of Bitcoin's circulating supply held in profit fell by 3.8% to 60.6%, Glassnode's profit and loss indicators show.

The decline in Bitcoin's price also sharply eroded unrealised gains, with Net Unrealized Profit/Loss (NUPL) falling from 3.4% to 1.1%. Short-term holders as a group were carrying a small unrealised loss by Sunday.

A fall in the realised profit-to-loss ratio from -0.21 to -0.63, meanwhile, showed that investors were crystallising substantially greater losses than profits.

Glassnode wrote: “Loss realization now clearly dominates, a sign of fear-driven selling, although the reading has not reached its low band,”

Liquidations leave leverage at elevated levels

Signs of strain were also evident in Bitcoin's derivatives market, but the latest sell-off has not fully flushed out leveraged positions.

Over the past week, futures open interest fell 1.1%, from $37.4 billion to $37 billion. Position closures during Thursday's fall, followed by a further round of long liquidations on Sunday, accounted for the reduction, according to Glassnode.

Open interest nevertheless continues to sit towards the upper end of its historical range, indicating that substantial leverage remains in the market.

A 7.1% fall in long-side funding payments, from $3.1 million to $2.9 million, still left them above their upper historical band.

Despite the recent weakness in Bitcoin, bullish traders are still paying a sizeable premium to hold their perpetual futures positions, Glassnode said. Leveraged positioning therefore remains skewed towards longs.

Increasing caution among market participants is also evident in options positioning.

Glassnode stated: “Options still price more turbulence than the market delivers, but the gap has narrowed sharply, so option buyers now pay a smaller premium over realized moves than last week,”

Spot buying falls short of offsetting selling pressure

A lack of demand as renewed pressure hit the market was reflected in Bitcoin's swift fall to $75,000. From $6.6 million a week earlier, spot cumulative volume delta (CVD) dropped to -$91.8 million. At the same time, spot trading volume rose 13.3% to $6.4 billion, pointing to heavier trading during the week's price fluctuations.

Outflows from US spot Bitcoin ETFs on four out of five trading days produced their largest weekly outflow total since early July.

Despite the leading cryptocurrency setting a fresh low, Glassnode noted that Bitcoin's price momentum rebounded from below its lower historical band to finish the week slightly higher.

The report stated: “Momentum stays weak, but it no longer confirms the decline, a sign that the selling has lost some of its force,”

At the time of writing, BTC stands at $74,700, a decline of 0.1% over the past 24 hours.