When Bitcoin (BTC) recently dropped to $31,000 after several withdrawals on the Anchor Protocol, decentralized stablecoin (UST) lost its peg. The Bitcoin crash has left 40% of cryptocurrency investors with unrealized losses.
The Luna Foundation Guard deployed a total of 28,200 BTC in response to the UST crisis. It took UST from $0.61 to $0.94 on the exchanges before it fell back down again. Selling pressure on BTC may have increased due to the increased liquidity.
Glassnode’s definition of network profitability
Glassnode’s definition of network profitability is a “decrease in the percentage of addresses, entities, and/or supply in profit,” which suggests that around 40% of BTC investors are sitting on unrealized losses. 60 to 62 percent of investors profited at $33,800, implying that 40% were sitting on unrealized coincides.
This level, according to Glassnode, “coincide with profitability seen in the late-2018 and late 2019-20 bear markets.” At these levels, the firm says that “prior to the final capitulation flush out event,” before the “further downside remains a risk.”
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In spite of the rising correlation between bitcoin and stocks, according to CNBC, 15.5% of all bitcoin wallets have experienced an unrealized loss in the last month alone. BTC’s role as an inflation hedge has been called into question by Bank of America analysts, who now advise investors to treat BTC more like a risk asset because of this correlation.
Investors paid fees to “urgent transactions” during the selloff, according to Glasnode analysts. “de-risk, sell, or re-collateralize their margin positions.” entered the Bitcoin mempool. On-chain transaction fees were the “largest value” in our dataset last week, according to the company.
There was a 15.2 percent increase in on-chain transaction fees “associated with exchange deposit transactions,” compared to 2017’s bull run and May 2021’s sell-off.
A total of $3.15 billion has changed hands since the cryptocurrency market peaked at around $69,000 in November 2021.
Bottom Line
Over the last few weeks, those with more than 10,000 BTC have been a “been a particularly significant distributive force over the last few weeks,” Retail investors with less than 1 BTC are the “strongest accumulators,” according to the report, with “significantly weaker” accumulation than earlier this year.
According to Bank of America, Bitcoin and the stock market are likely to remain linked for some time. There has been no correlation between the most popular cryptocurrency and gold since June 2021, despite frequent comparisons.
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