Bitcoin has fallen nearly 55% from its November peak, and 40% of holders are now underwater on their investments, according to new data from the online platform, Glassnode.
About 40% of Bitcoin investors are currently underwater because traditional and cryptocurrency markets have been falling continuously for several days. Assets are trading at 20% or more below their previous high. The S&P 500 is down 15% this year in May while half of the Nasdaq index’s equities have lost more than 50% from their highs.
Apart from this, Bitcoin has dived further. The popular cryptocurrency is down roughly 55% from its November peak of $69,000 and it is currently trading below $32,000 as on 8th May, 2022. This means a lot of Bitcoin holders will view their portfolios dipped into the red.
According to Glassnode, a blockchain analytics firm, only 60% of Bitcoin investments remained profitable when the cryptocurrency was priced at $33,600 per unit. The remaining 40% of investments sank below the water. Moreover, the price of the cryptocurrency is falling lower and floating between $31,000 and $32,000 and now even a larger share of investments are in the red. That percentage is even higher when you isolate the short-term holders who got skin in the game in the last six months when the price of bitcoin pe topnotchaked at around $69,000.
15.5% of all bitcoin wallets fell into an unrealised loss
In a month alone of May, 2022, 15.5% of all bitcoin wallets fell into an unrealised loss, as the world’s most popular cryptocurrency plunged to the $31,000 level, tracking tech stocks lower. Bitcoin’s close correlation to the Nasdaq challenges the argument that the cryptocurrency functions as an inflation hedge.
Analysts from Glassnode also noted an influx of “urgent transactions” amid this latest sell-off, in which investors paid higher fees, indicating they were willing to pay a premium to expedite transaction times. The total value of all on-chain transaction fees paid reached 3.07 bitcoin in the first week of May. The largest yet recorded in its dataset.
“The dominance of on-chain transaction fees associated with exchange deposits also signalled urgency,” the report showed. It further supported the case that bitcoin investors were seeking to de-risk, sell, or add collateral to their margin positions in response to the recent market volatility.
During the sell-off, more than $3.15 billion in value moved into or out of exchanges, in the first week of May. The largest amount since the market hit its all-time high in November 2021.
Many wallet holders slow down their collection
Most wallet units, “from shrimp to whales,” have softened in their on-chain accumulation trends, according to the report, referring to both small-scale and large-scale investors.
Wallets with balances of more than 10,000 bitcoin have been a particularly significant distributive force over the last few weeks. While there is more conviction among retail investors, data showed that those holding less than one bitcoin are the strongest accumulators. The accumulation among these smaller-scale holders is notably weaker than it was in February and March.
Fundstrat Global Advisors is calling a bottom of around $29,000 a coin, and the firm is now advising clients to buy one to three months to put protection on long positions.
Glassnode said Bitcoin’s sudden price plunge is being driven by both “shrimps and whales” racing to get money out of the market, which means that investors with both small and large stakes in the crypto are all seeking to avoid the crash.
Glassnode added that there has been “a high degree of urgency” associated with Bitcoin transactions this past week. The total value of transaction fees has shot above the high set during the last crypto crash in December.