Long-term holders are experiencing high selling pressure from actual and unrealized losses, Glassnode report shows.Read MoreFeedzy
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Some analysts believe bitcoin’s recent dips below $20,000 show the price level is not as critical anymore.
“A move below $17,500-$18,500 support could accelerate the sell-off, while a break of $19,500 may also signal further pain to come,” said Oanda senior market analyst Craig Erlam.
The Crypto Fear and Greed Index dropped six points to 16, the lowest in a week, but remains in the “extreme fear” category.
Nearly all altcoins were down Tuesday, with ATOM declining by the most, down 11% over the past 24 hours. Ether (ETH) was down 7.8%.
?Bitcoin (BTC): $19,453 -5.5%
?Ether (ETH): $1,042 -9.1%
?S&P 500 daily close: 3,818.80 -0.9%
?Gold: $1,724 per troy ounce -0.3%
?Ten-year Treasury yield daily close: 2.96% -0.03
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
Long-term bitcoin holders are experiencing both actual and unrealized losses and are likely feeling massive selling pressure, the blockchain analysis firm Glassnode wrote in a report.
Actualized losses can be seen by using the Long-Term Holder Spent Output Profit Ratio (LTH-SOPR), a metric that compares the price at which a coin investor sold coins to the cost at which the coins were bought. An LTH-SOPR above 1.0 means that long-term holders are netting a profit.
However, the current LTH-SOPR is 0.67, the lowest since January 2019, meaning that the average long-term holder is selling coins at a 33% loss.
Realized losses can be seen through the long-term holders’ cost basis. If the market valuation falls below the LTH-Cost Basis, it means that long-term holders are holding coins at a loss.
Right now, LTHs are, on average, underwater, with an aggregate unrealized loss of 14%.
The immediate consequence of this combination of actualized and unrealized losses is that long-term holders are selling coins, which are then bought by price-sensitive short-term holders, who are less likely to hold coins at a loss.
However, in order for the market to recover, these coins should mostly be held by price-resistant long-term holders.
During the depths of previous bear markets, long-term holders held more than 34% of the crypto supply at a loss while short-term holders held just 3% to 4%. However, short-term investors currently hold 16.2% of the supply, suggesting that more tokens have to be redistributed to long-term holders before the market can emerge from a bottom.
“While many bottom formation signals are in place, the market still requires an element of duration and time pain to establish a resilient bottom,” Glassnode wrote. “Bitcoin investors are not out of the woods yet.”
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Looking at the Claims Celsius Operated Like a Ponzi:A new lawsuit alleges that a major crypto lender was, in fact, a Ponzi scheme.
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Crypto Industry Portrayed ‘Illusion of Respectability’, Paul Krugman Says:In a New York Times article, the economist examined how the industry was able to market itself to respectable institutions and individuals.
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