Bitcoin has recently broken below the $60,000 support level for the first time in two months, signaling a potential shift in market sentiment. The digital asset, which experienced a surge in value following the launch of Spot Bitcoin ETFs in the US, is now facing a period of consolidation. A report from Glassnode suggests that the euphoria surrounding Bitcoin has been fading over the past 6.5 months, leading to increased selling pressure among investors. As the percentage of addresses holding losses rises and the percentage of addresses in profit decreases, it is clear that the market dynamics are changing.
Consolidation and Profit-Taking
Glassnode’s analysis indicates that Bitcoin has been in a state of euphoria earlier in this market cycle compared to past cycles. The Net Unrealized Profit & Loss (NUPL) metric shows that Bitcoin entered a euphoric phase approximately 6.5 months before the recent halving, driven by excitement over Spot Bitcoin ETFs. This is in contrast to the 2021 market cycle, where the NUPL did not enter a profit zone until 8.5 months post-halving. Despite the current correction, long-term holders are still optimistic about the future, waiting for the halving effect to take hold.
The recent uptick in net outflows across all wallet sizes in April indicates a prevailing sentiment of selling among traders. Short-term holders have been experiencing losses at a significant level since March, adding to the overall selling pressure in the market. While the fear rating may cause concern among investors, a healthy pullback after a period of rapid growth is often seen as beneficial for the market’s long-term stability.
As Bitcoin trades at around $59,899 at the time of writing, it is down by 5.35% in the past 24 hours. The current cost-basis for short-term holders is at $66,700, with the realized price at $59,800, indicating that many holders in this group may have entered the loss zone. Analysts suggest that $59,800 is a crucial price level to monitor, as historical data shows that Bitcoin has tended to bounce back above the STH realized price. It is important for investors to remain cautious and conduct thorough research before making any investment decisions.
The recent decline in Bitcoin’s price and the shift in market sentiment suggest that the euphoria surrounding the digital asset may be fading. With increased selling pressure and a decrease in profit margins for investors, it is essential for market participants to stay informed and make well-informed decisions in a volatile environment. As the cryptocurrency market continues to evolve, adaptability and careful analysis are key to navigating potential challenges and opportunities.