Bitcoin [BTC] traders, especially short-term holders, are facing some of the toughest losses seen in years. Since early February, many of these investors have found themselves in the red, with their losses surpassing even those experienced during the FTX crash and the 2024 market correction. While the losses have been substantial, the situation has not triggered the same panic as previous downturns.

Short-Term Holders in the Red

Short-term Bitcoin holders, who typically hold the asset for 1 to 3 months, have been hit particularly hard. These traders entered the market when Bitcoin was riding high in early March, flirting with $84,000, only to watch the price decline over the coming weeks. As a result, their losses have accumulated slowly, leaving them with realized losses of up to -18.4%.

This is eerily close to the -18.9% realized losses seen during the late 2022 FTX crash, yet the mood in the market remains different. While many traders are deeply in the red, panic has not fully set in. There’s a sense of uncertainty and hesitation, but no mass sell-off. Instead, traders are opting to wait, hoping for a reversal rather than rushing to exit their positions.

The Market Sentiment: Caution Over Panic

The key difference between the current market downturn and the FTX crisis lies in the overall sentiment. During the FTX crash, panic and contagion spread rapidly, with liquidity draining from the market. In contrast, the current phase feels less dramatic, with Bitcoin still holding above $80,000 and liquidity remaining relatively stable. While losses have been painful, traders are not abandoning the market in mass numbers. Instead, many are holding out, hoping for a recovery.

This cautious approach suggests that traders are more reluctant to capitulate at this point. While the losses are substantial, it’s more of a wait-and-see attitude than a flight from the market. Many short-term holders are holding their positions, hoping the market will rebound and erase the losses they’ve faced over the past few months.

Are We Headed for a Deeper Downturn?

Despite the cautious sentiment, the question remains whether this is just a prolonged pullback or if a deeper correction is imminent. Market watchers are keeping a close eye on the situation, with some drawing comparisons to the market conditions seen during the FTX collapse. In that period, Bitcoin faced rapid and severe losses. While the magnitude of the current downturn is similar, the atmosphere remains less chaotic.

However, as losses surpass those seen in the 2024 correction, traders are beginning to worry if history will repeat itself. The lingering uncertainty and the slow bleed of losses have led many to question if a full-blown capitulation phase is on the horizon.

A Waiting Game for Bitcoin Traders

For now, Bitcoin’s market sentiment is best described as a waiting game. Traders are stuck between holding their positions in the hopes of a breakout and the fear that further declines could push the market into a deeper correction. The FOMO-driven buys of short-term holders have been met with an extended downtrend, and it’s unclear how long this will last.

For those who entered during the euphoric highs of early March, the current situation feels especially painful—dragged out, with no clear direction, and a constant sense of uncertainty hanging over the market. As the losses mount and short-term holders continue to hold their positions, the question remains: will they hold out for recovery, or will a deeper market shift force capitulation?

Traders and investors alike are closely monitoring the market, as it could be on the brink of either a major breakthrough or a prolonged downtrend. Whether the worst is truly over or if it’s yet to come is something only time will tell.