Bitcoin Euphoria Cools Off As BTC Distribution Enters Fear Zone
May 01 2024 - 1:00PM
NEWSBTC
Bitcoin has finally broken below the $60,000 support level for the
first time in two months. The world’s largest digital asset has
largely been in a euphoria phase since the beginning of the year,
particularly after the launch of Spot Bitcoin ETFs in the US
market. However, the current consolidation of the price of Bitcoin
indicates the euphoria might be fading. According to a new report
from Glassnode, an on-chain analytics firm, the euphoria
surrounding Bitcoin, which has been active for the past 6.5 months,
looks to be fading. At the same time, the BTC distribution has
entered into the fear zone and investors are now heavily weighted
towards selling. Selling Pressure Rises After reaching an all-time
high of over $73,737 in March 2024, Bitcoin has declined by more
than 18% as investors take profits. This drop in price has been
accompanied by a rise in the percentage of addresses holding
losses, indicating increased selling pressure. The percentage of
addresses making a profit has fallen in tandem from over 99% to 86%
at the time of writing. Related Reading: Ethereum Flashes
Bullish Signals, Can It Rally 50% From Here? On-chain analytics
platform Glassnode noted in its recent report the consolidation
action. According to the Net Unrealized Profit & Loss (NUPL)
metric, Bitcoin has been in a euphoria mode very early in this
cycle when compared to past cycles. Notably, the NUPL crossed over
0.5 approximately 6.5 months before the just concluded halving
amidst hype about Spot Bitcoin ETFs. This is in comparison to the
2021 market cycle, where the NUPL was triggered into a profit zone
8.5 months after the Bitcoin halving. This metric suggests the
market is still in its euphoria phase for the last seven months but
has cooled off significantly due to correction in the past two
months. Interestingly, the report noted a “distinct uptick in net
outflows” across all wallet sizes throughout April, indicating the
current sentiment among traders. This means traders are now in a
sell-side pressure across the board. Furthermore, a majority of
short-term (one week to one month) holders have been posting losses
on the 90-day +1sd level since March. Source: Glassnode What
Does This Mean For Bitcoin? While the “fear” rating may worry
investors, a pullback after such a steep price rise is considered
healthy by most crypto analysts. Many long-term holders are still
holding strong and are waiting for the halving effect to kick in.
At the time of writing, Bitcoin is trading at $59,899 and is down
by 5.35% in the past 24 hours. Related Reading: Crypto Funds Mark
3rd Consecutive Weeks Of Outflows With $435 Million In Withdrawals
Considering the current cost-basis for short-term holders (STH) is
at $66,700, and their realized price is at $59,800, many more
holders in this cohort have possibly entered into the loss
zone. According to crypto analyst Ali Martinez, $59,800 is a
key price level to watch, as history has shown Bitcoin tends to
bounce over the STH realized price. BTC price falls to $57,000 |
Source: BTCUSD on Tradingview.com Featured image from CryptoSlate,
chart from Tradingview.com
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