Bitcoin, the world’s largest digital asset, recently broke below the $60,000 support level for the first time in two months. This decline comes after several months of euphoria in the market, particularly driven by the launch of Spot Bitcoin ETFs in the US. However, a new report from Glassnode suggests that this euphoria may be fading as the price of Bitcoin consolidates. The report points out that the BTC distribution has shifted towards selling, with an increasing number of addresses holding losses and a decrease in the percentage of addresses making a profit.
Glassnode’s recent report highlights the consolidation phase that Bitcoin is currently experiencing. The Net Unrealized Profit & Loss (NUPL) metric indicates that Bitcoin entered a euphoric phase early in this market cycle compared to previous cycles. While the market has been in a euphoria phase for the past seven months, recent corrections have cooled off this sentiment. The report also notes a significant increase in net outflows across all wallet sizes in April, signaling a prevailing sell-side pressure among traders.
Impact of Price Drops and Long-Term Holders
Despite concerns about fear in the market, a pullback following a steep price increase is seen as a healthy market correction by many crypto analysts. Long-term holders are still optimistic and are waiting for the effects of the halving to come into play. Currently, Bitcoin is trading at $59,899, down by 5.35% in the past 24 hours. Considering the current cost-basis for short-term holders and the realized price, many holders in this cohort may have entered the loss zone.
Crypto analyst Ali Martinez points out $59,800 as a key price level to monitor, as historical data suggests that Bitcoin tends to bounce back above the realized price of short-term holders. This insight provides a potential signal for investors to gauge market movements and plan their strategies accordingly.
The recent price movements in the Bitcoin market suggest a shift in sentiment from euphoria to caution. The increased selling pressure and the rise in addresses holding losses indicate a period of consolidation and market correction. While short-term holders may be facing losses, long-term holders remain optimistic about the future of Bitcoin. As always, investors are advised to conduct thorough research and analysis before making investment decisions in the volatile cryptocurrency market.
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