Over the recent weekend, Bitcoin experienced a significant drop in price, falling below the $60,000 mark due to rapid selling by major holders like the German and US governments. This sudden drop resulted in one of the largest declines seen for the leading cryptocurrency in the past two years, causing the market to lose billions of dollars.
Despite the sharp decline in the value of Bitcoin, a vast majority of investors are still enjoying significant profits. Data from the on-chain tracker IntoTheBlock reveals that out of approximately 53.57 million Bitcoin holders worldwide, about 83% are currently in profit, even as the price of BTC hovers just above $56,000. This leaves only around 17% of holders who are not seeing profits at the moment.
Within the 17% of Bitcoin holders not currently profiting, 13% are experiencing losses as they purchased their BTC coins at a higher price than the current market value. The remaining 4% are at breakeven, having bought their coins at the current price, neither making nor losing money at the current value. This implies that approximately 44.61 million Bitcoin investors are still reaping profits in their positions, while 6.8 million are encountering losses and around 2.16 million are at a standstill.
There is a growing trend impacting long-term holders of Bitcoin, as indicated by a Sentiment report. The average returns of these long-term holders are at risk of falling into losses for the first time in over a year. Despite this, the decline in average long-term holder returns is not necessarily negative for the price, given Bitcoin’s historical response when this metric turns negative.
According to Santiment, a negative average long-term holder return can present a good buying opportunity, particularly when “Bitcoin’s 30-day and 365-day MVRV are in negative territory.” This signifies a time when buying is statistically advantageous relative to other traders’ pain. In fact, historical data shows that buying during such periods can yield significant returns, with a previous scenario resulting in a +132% return on BTC.
Developments such as these can serve as valuable indicators of the market bottom and signal when it may be an opportune time to start buying. Investors should pay attention to metrics like the average long-term holder returns and Bitcoin’s MVRV to make informed decisions about their investments during market fluctuations.
Leave a Reply