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 is down to around $20,000 today, having recovered from lows below the 2017 cycle peak. Losses have been widespread as the market crashed.
But which group of investors between individuals and institutions recorded the most losses?
Analyst on who is losing more
Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, says all wallet cohorts – whether whales or shrimps – have seen “some degree” of loss.
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.
Going by analytics firm Glassnode’s recent data on Bitcoin wallet profit/loss outlook, it is clear that nearly all holder cohorts have hit huge unrealized losses. According to the firm, this sell-off has been 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 hit 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.
Since then, it has steadily shrunk, with last week’s sell-off 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 CoinJournal, says there is evidence that institutions are vulnerable in this market.
He points to Canada’s Purpose ETF, the first ever actively managed crypto exchange-traded fund. Data from the firm shows the firm sold 24,500 BTC on 18 June, 2022. This happened as the flagship cryptocurrency’s price plummeted to lows of $17,600.
why is this the case? Well, Sotiriou also points out another problem – the stain that is largely the fault of top crypto lenders.
These firms, the analyst said, rode the bull market and became too generous. Over-leveraging among borrowers meant too much debt and as markets plummet, forced selling of Bitcoin and Ethereum has ensued.
Too many institutions could therefore be overexposed to some of the failing crypto lenders and hedge funds, with more sales likely.