Bitcoin has finally broken below the $60,000 support level for the first time in two months. The world’s largest digital asset has largely been in a euphoria phase since the beginning of the year, particularly after the launch of Spot Bitcoin ETFs in the US market. However, the current consolidation of the price of Bitcoin indicates the euphoria might be fading.
According to a new report from Glassnode, an on-chain analytics firm, the euphoria surrounding Bitcoin, which has been active for the past 6.5 months, looks to be fading. At the same time, the BTC distribution has entered into the fear zone and investors are now heavily weighted towards selling.
Selling Pressure Rises
After reaching an all-time high of over $73,737 in March 2024, Bitcoin has declined by more than 18% as investors take profits. This drop in price has been accompanied by a rise in the percentage of addresses holding losses, indicating increased selling pressure. The percentage of addresses making a profit has fallen in tandem from over 99% to 86% at the time of writing.
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On-chain analytics platform Glassnode noted in its recent report the consolidation action. According to the Net Unrealized Profit & Loss (NUPL) metric, Bitcoin has been in a euphoria mode very early in this cycle when compared to past cycles. Notably, the NUPL crossed over 0.5 approximately 6.5 months before the just concluded halving amidst hype about Spot Bitcoin ETFs.
This is in comparison to the 2021 market cycle, where the NUPL was triggered into a profit zone 8.5 months after the Bitcoin halving. This metric suggests the market is still in its euphoria phase for the last seven months but has cooled off significantly due to correction in the past two months.
Interestingly, the report noted a “distinct uptick in net outflows” across all wallet sizes throughout April, indicating the current sentiment among traders. This means traders are now in a sell-side pressure across the board. Furthermore, a majority of short-term (one week to one month) holders have been posting losses on the 90-day +1sd level since March.
What Does This Mean For Bitcoin?
While the “fear” rating may worry investors, a pullback after such a steep price rise is considered healthy by most crypto analysts. Many long-term holders are still holding strong and are waiting for the halving effect to kick in. At the time of writing, Bitcoin is trading at $59,899 and is down by 5.35% in the past 24 hours.
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Considering the current cost-basis for short-term holders (STH) is at $66,700, and their realized price is at $59,800, many more holders in this cohort have possibly entered into the loss zone.
According to crypto analyst Ali Martinez, $59,800 is a key price level to watch, as history has shown Bitcoin tends to bounce over the STH realized price.
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