Bitcoin has been on a losing streak for the past few days, with its prices hitting the lowest ever experienced since July 2021.
Bitcoin Profitability Goes Low
The general crypto market has followed suit with significant losses that have led the market worth to go below $1.5 trillion. Investors and analysts are divided on whether it is the start of a prolonged bear trend or a temporary dip as Bitcoin climbs higher.
CryptoQuant stated that 46.8% of BTC supply is at a loss, meaning that this percentage of investors accumulated the Bitcoin at a higher price than the current. In addition, they stated that the higher the loss %, the better it is to accumulate at those prices.
The current drop in profitability is the fourth in the last three years. Bitcoin profitability previously was at 18.1 percent and 19.1 percent in July and December 2021, respectively. The two were the third and second-worst ever monthly declines. By Glassnode’s reckoning, the most decline was in March 2020, when 35.4% of the market fell into losses in 30 days.
According to a report by Glassnode, the sudden price decline of Bitcoin is being driven by both whales and sharks racing to get out of the market. It has caused both large and small investors to seek out safer assets.
According to Glassnode, there has been “a high degree of urgency” around Bitcoin transactions in the last week. Over the last month, the total value of transaction fees surpassed the December high set during the last crypto crash.
The group noted that over $3.15 billion worth of Bitcoin has been moved into or out of various exchanges in the last week, the highest liquidity amount since November 2021.
A Lower Drop?
Bitcoin could “perhaps receive a mini-bounce near $35,000, but unless we break the trend line at around $37,000, I’m predicting for $29,000 in the coming weeks or weeks,” says crypto analyst Wendy O in a new social media video.
Numerous cryptocurrency investors have suggested that Bitcoin is the digital era’s version of gold, a potential flight-to-safety investment, and an inflation hedge. However, the price behavior of cryptocurrencies implies that the market does not view these extremely volatile assets as reliable value repositories during times of economic instability.
Despite the intact long-term fundamentals of Bitcoin, it will take a long time for the price to recover to its record highs. The reason is that most investors are in a panic-selling mode.
The Drop is in Close Correlation with Stocks
Because of the Federal Reserve’s rapid monetary tightening and recession worries, traditional financial markets and cryptocurrencies saw a selloff. The largest cryptocurrency by market value last fell below $30,000 on July 20, 2021, when it fell to $29,301 before recovering.
As more institutions entered the Bitcoin and cryptocurrency markets last year, their link and stock prices have risen. As a result, Wall Street is having a terrible day as tech stocks fall precipitously. The Nasdaq index fell by 4.3 percent.
According to Edward Moya, a senior market analyst at Oanda, Bitcoin is breaking below its critical technical levels as the selloff on Wall Street continues. He also noted that institutional investors are also taking a close look at Bitcoin due to the losses experienced by those who got into the crypto last year.
Despite the lack of fundamental changes in the past few months, the US economy’s uncertainty and a possible recession are still creating a challenging environment for cryptocurrencies, such as Bitcoin. He noted that no one is buying the dips yet, which leaves Bitcoin vulnerable.