Bitcoin profitability for long-term holders decline to 4‑year low: Data

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Bitcoin’s (BTC) long-term prof­itabil­i­ty has declined to lev­els last seen dur­ing the pre­vi­ous bear mar­ket in Decem­ber 2018. Accord­ing to data shared by cryp­to ana­lyt­ic firm Glassnode, BTC hold­ers are sell­ing their tokens at an aver­age loss of 42%.

Bit­coin long term hold­ers. Source: Glassnode

The Glassnode data indi­cate that long-term hold­ers of the top cryp­tocur­ren­cy sell­ing their tokens have a cost basis of $32,000, mean­ing the aver­age buy­ing price for these hold­ers sell­ing their stack is above $30,000.

The cur­rent mar­ket down­turn added to the declin­ing prof­itabil­i­ty can be attrib­uted to sev­er­al macro­eco­nom­ic fac­tors. The BTC mar­ket still has a heavy cor­re­la­tion with the stock mar­ket, espe­cial­ly tech stocks, which are cur­rent­ly see­ing an even big­ger down­trend than crypto.

The ris­ing infla­tion added to cen­tral banks’ fail­ure to con­trol it has also added to the pain of BTC investors. With much less to invest at their hands, traders and long-term hold­ers are shift­ing to short-term prof­itabil­i­ty and less risky assets.

This was evi­dent from the BTC min­er sell-offs as well, BTC min­ers have his­tor­i­cal­ly been long-term hold­ers in antic­i­pa­tion of a high­er prof­it. How­ev­er, the rise in ener­gy costs, added to grow­ing min­ing dif­fi­cul­ty, has nar­rowed the prof­it mar­gins of these min­ers, forc­ing them to set­tle for short-term profits.

Relat­ed: US Trea­sury yields are soar­ing, but what does it mean for mar­kets and crypto?

Bit­coin min­er bal­ance has seen large out­flows since prices were reject­ed from the local high of $24.5 thou­sand, sug­gest­ing aggre­gate min­er prof­itabil­i­ty is still under a degree of stress. While the min­er out­flow has ranged between 3,000–8,000 BTC, how­ev­er, mar­ket data indi­cate that a price decline to $18,000 could lead to a month­ly out­flow of 8,000 BTC. 

Bit­coin, the top cryp­tocur­ren­cy, is cur­rent­ly trad­ing in the $19,000-$20,000 range, strug­gling to con­quer the $20,000 resis­tance despite mul­ti­ple break­outs above it in the month of September.

Bit­coin miner’s net posi­tion change Source: Glassnode

The long-term hold­er prof­itabil­i­ty added with min­er prof­itabil­i­ty has reached a mul­ti-year low. How­ev­er, the lev­els are quite sim­i­lar to when the cryp­to mar­ket bot­tomed out dur­ing pre­vi­ous cycles.

Bit­coin is cur­rent­ly trad­ing in the $19,000-$20,000 range, strug­gling to con­quer the $20,000 resis­tance despite mul­ti­ple break­outs above it in the month of Sep­tem­ber. The top cryp­tocur­ren­cy is cur­rent­ly trad­ing at a 70% dis­count from its mar­ket top of $68,789 post­ed in Novem­ber last year. 

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