Bitcoin retreated below the $90K threshold once again, and skittish investors with so-called “paper hands” are getting the heck out of dodge in droves. At least that’s what crypto market analysis firm Glassnode revealed in a Wednesday blog post.

“This plunge marks the third time since early 2024 that price has fallen below the lower band of the short-term holder cost-basis model,” the firm explains. “However, the intensity of panic among top buyers is notably higher this time.”

(Almost all short-term holders who bought bitcoin over the last 155 days are underwater, a situation that has led to panic selling, Glassnode says. / Glassnode)

In other words, investors and traders who bought bitcoin within the past 155 days, or June 17 and after, are all underwater. BTC was trading at roughly $104K at the time, about $15K higher than today’s price.

Read more: Yes, Bitcoin Is Down, but ‘the Sell-Off Is Over,’ Standard Chartered Says

But panic selling isn’t the only factor responsible for the cryptocurrency’s slump, Glassnode also points out that weak demand, high ETF outflows, heightened volatility, and a shift from speculation to hedging, are all key factors in the asset’s downward spiral.

Bitcoin ETFs saw net outflows of almost $3 billion for the month, according to data from Sosovalue.com. Speculation in BTC derivatives dried up and was replaced by anxious traders looking to hedge risk rather than hunt for profits. Volatility soared, particularly in the wake of bitcoin’s drop below $90K. “Implied volatility is now close to the levels seen during the October 10 liquidation event, showing how rapidly traders have reassessed near-term risk,” Glassnode says.

With all of these factors applying negative pressure on bitcoin, who can blame the paper hands crowd for jumping ship? And if nothing changes soon, the ecosystem will likely slide into bear market territory in short order.

“Stronger demand must emerge to absorb distressed sellers,” Glassnode explains. “Or the market will require a longer, deeper accumulation phase before regaining equilibrium.”

Bitcoin fell 4.45% to $89,106.70 at the time of writing, which works out to be a 12.17% decrease over seven days, according to Coinmarketcap data. The digital asset traded as low as $88,760.35 and peaked at $93,549.36 over the last 24 hours.

( BTC price / Trading View)

Daily trading volume tumbled 36.54% to $73.68 billion for the day. Market capitalization eased to $1.87 trillion, but bitcoin dominance climbed 0.51% to 59.35%, indicating BTC is faring better than many other cryptocurrencies.

( BTC dominance / Trading View)

The total value of open bitcoin futures contracts slipped 1.16% to $65.77 billion, Coinglass data shows. Liquidations finally subsided, coming in at $144.60 million since yesterday. Long investors still garnered a lion’s share of the losses at $124.82 million, but that’s a far cry from Tuesday’s $359.12 million. Short sellers’ liquidations were particularly low at $19.78 million.

• Why did bitcoin fall below $90K again?
  Glassnode says a mix of weak demand, ETF outflows, and rising volatility pushed BTC into another steep decline.
• Who is selling during the dip?
  Short-term holders; those who bought within the last 155 days, are panic-selling as prices sink below their cost basis.
• What’s happening in the ETF and derivatives markets?
  Bitcoin ETFs saw nearly $3B in monthly outflows, while traders shifted from speculation to hedging as volatility spiked.
• What needs to happen for bitcoin to recover?
  Glassnode says stronger demand must emerge to absorb distressed sellers or BTC may face a longer accumulation phase.

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