Bitcoin selloff analyst: Who loses the most?

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Bitcoin has lost more than 70% of its value since hitting an all-time high of $69,000 in November 2021.

In large part, the massive sell-off in the crypto market since last November has caused all types of investors to tumble in their positions.

Bitcoin fell to around $20,000 today after recovering from lows below the 2017 cycle peak. Losses were widespread as the market crashed.

But which group of investors between individuals and institutions recorded the most losses?

Analyst on who loses the most

Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, says all cohorts of portfolios — whether whales or shrimp — suffered “some degree” of loss.

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By whales, the analyst refers to that group of Bitcoin wallets with 1000 BTC or more. Shrimps are usually retail wallets and contain lower amounts of BTC.

From recent data from analytics firm Glassnode on the Bitcoin wallet profit/loss outlook, it is clear that almost every cohort of holders has suffered huge unrealized losses. According to the firm, this sale was more painful than that of March 2020.

The data, however, suggests that the least profitable cohort of wallets are those holding $1-100 BTC.

Glassnode chart showing unrealized loss reaching 30% of market cap

Institutions are vulnerable

When Bitcoin hit highs of $69,000 in November, with the rest of the market joining amid a bull market supported by institutional activity, the total crypto market capitalization rose to over $3 trillion.

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Since then, it has steadily declined, with last week’s selloff pushing the global crypto market cap below $1 trillion.

Major institutional holders like MicroStrategy and Tesla have significantly lowered the value of their holdings since adding BTC to their balance sheets. Both companies have not sold their Bitcoin, but Sotiriou, in email comments shared with TUSEN, says there is evidence that institutions are vulnerable in this market.

He mentions Canada’s Purpose ETF, the very first actively managed crypto exchange-traded fund. Company data shows that the company sold 24,500 BTC on June 18, 2022. This happened as the price of the flagship cryptocurrency dropped to $17,600.

These companies, the analyst said, rode the bull market and got too generous. Borrower over-indebtedness meant too much debt, and as the markets crashed, the forced selling of Bitcoin and Ethereum ensued.

Too many institutions could therefore be overexposed to some of the failing crypto lenders and hedge funds, with more sales likely.

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