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 euphoria that surrounded Bitcoin for the past 6.5 months seems to be fading, according to a new report from Glassnode. This shift is evident in the increasing distribution of BTC into the fear zone, with investors now leaning towards selling. After reaching an all-time high of over $73,737 in March 2024, Bitcoin has experienced a decline of more than 18%, leading to a rise in the percentage of addresses holding losses. The percentage of addresses in profit has also decreased from over 99% to 86% at the time of writing, highlighting the selling pressure in the market.
Glassnode’s Net Unrealized Profit & Loss (NUPL) metric indicates that Bitcoin entered a euphoria phase early in the current cycle, pushing past the 0.5 mark approximately 6.5 months before the most recent halving event. This is in contrast to the previous market cycle, where the NUPL moved into the profit zone 8.5 months post-halving. While the market has been in a euphoric state for the past seven months, recent corrections have cooled off this sentiment. The report also mentions a noticeable increase in net outflows across all wallet sizes in April, reflecting a prevailing sell-side sentiment among traders. Additionally, short-term holders have been facing losses on the 90-day +1sd level since March, signaling a challenging period for this cohort of investors.
While the current fear rating may unsettle some investors, a pullback following a significant price increase is generally seen as healthy by most crypto analysts. Many long-term holders are still holding strong, anticipating the positive impact of the halving event on the market. Bitcoin is currently trading at $59,899, down by 5.35% in the past 24 hours, indicating a period of consolidation and adjustment in the market. With the cost-basis for short-term holders sitting at $66,700 and the realized price at $59,800, a considerable number of investors in this category may have entered into the loss zone as the market corrects itself.
Crypto analyst Ali Martinez highlights $59,800 as a crucial price level to monitor, as historical data suggests that Bitcoin tends to bounce back above the realized price for short-term holders. The recent drop in Bitcoin’s price to $57,000 underscores the volatility and uncertainty in the market, with potential for further fluctuations in the coming days. Investors are advised to conduct thorough research and exercise caution when making investment decisions, as the cryptocurrency market carries inherent risks that require careful consideration.
The fading euphoria surrounding Bitcoin signals a period of adjustment and recalibration in the market, with investors reassessing their strategies and positions. The recent corrections and price movements reflect a maturing market that is subject to both bullish and bearish sentiments. It is essential for investors to stay informed, exercise prudence, and remain vigilant in navigating the ever-changing landscape of the cryptocurrency market.