Recently, the Bitcoin price experienced a significant drop below $60,000 due to rapid selling by major holders such as the German and US governments. This resulted in one of the largest drops seen for the pioneer cryptocurrency in the last two years, causing the market to lose billions of dollars. However, despite this downturn, the majority of Bitcoin holders are still enjoying major gains. Data from the on-chain tracker IntoTheBlock reveals that out of the approximately 53.57 million Bitcoin holders worldwide, 83% are currently seeing profits, even with the BTC price hovering just above $56,000. This means that only around 17% of total BTC holders are not currently profiting from their investments.
Out of the 17% of Bitcoin holders who are not currently seeing profits, 13% are experiencing losses as they bought their BTC coins at a higher price than the current value. The remaining 4% of holders are at breakeven, having purchased their coins around the current value. This leaves approximately 44.61 million Bitcoin investors still in a profitable position, with 6.8 million holders facing losses and around 2.16 million at breakeven. Interestingly, the majority of investors who are profiting have entry prices below $50,000, indicating that even with a further 10% crash, most Bitcoin investors would still be in a profitable position.
Despite the overall profitability of Bitcoin investors, a growing trend is impacting long-term holders. According to a Sentiment report, the average returns of Bitcoin long-term holders are at risk of falling into losses for the first time in over a year. However, this development does not necessarily spell doom for the price of Bitcoin. Historically, when the average long-term holder returns have fallen into the red, it has been a good buying opportunity. Santiment notes that when “Bitcoin’s 30-day and 365-day MVRV are in negative territory,” it is usually a sign that buying at that point could lead to significant returns. In fact, data shows that buying at similar points in the past has resulted in returns of up to +132% on Bitcoin investments.
Developments like the potential fall of long-term holder returns into losses can be indicators of where the bottom of the market may be and when it could be a good time to start buying. When both short-term and long-term MVRV indicators are in negative territory, it often signifies a strong buying opportunity. This is because buying at points of maximum pain for other traders can lead to significant returns in the future. Therefore, despite recent market volatility and potential challenges for long-term holders, savvy investors may view these developments as a prime opportunity to enter or increase their positions in Bitcoin.