Bitcoin, the world’s largest digital asset, has recently experienced a significant decline, breaking below the $60,000 support level for the first time in two months. The cryptocurrency has been on a bullish trend since the beginning of the year, fueled by the launch of Spot Bitcoin ETFs in the US market. However, the current consolidation of Bitcoin’s price suggests that the euphoria surrounding the digital asset may be fading.
A new report from Glassnode, an on-chain analytics firm, indicates that the euphoria surrounding Bitcoin, which has been active for the past 6.5 months, is dissipating. The report highlights a shift in market sentiment, with investors now heavily weighted towards selling. This is evidenced by the increasing percentage of addresses holding losses and a decrease in the percentage of addresses making a profit.
Glassnode’s report also discusses the Net Unrealized Profit & Loss (NUPL) metric, which suggests that Bitcoin has been in a euphoric phase earlier in this cycle compared to past cycles. The NUPL crossed over 0.5 approximately 6.5 months before the recent halving, signaling heightened excitement around Spot Bitcoin ETFs. Despite the market’s euphoria over the past seven months, the correction in the past two months has cooled off the sentiment significantly.
The report notes a distinct uptick in net outflows across all wallet sizes in April, indicating a sell-side pressure among traders. Short-term holders have been experiencing losses since March, further adding to the selling pressure in the market. While this may cause concern for investors, a pullback after a steep price rise is often considered healthy by crypto analysts.
Currently, Bitcoin is trading at $59,899, down by 5.35% in the past 24 hours. With a significant number of short-term holders entering the loss zone, the $59,800 price level becomes crucial. Historically, Bitcoin has bounced back above the short-term holder’s realized price, offering a glimmer of hope for a potential recovery.
The recent decline in Bitcoin’s price and the shift in market sentiment suggest that the euphoria surrounding the digital asset may be fading. While this may cause concern among investors, a pullback is often seen as a healthy correction in the market. It is important for investors to conduct their own research and make informed decisions when it comes to investing in cryptocurrencies.
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