Indicators within bitcoin chains show that more short-term holders have entered the loss range and are more likely to sell. If these holders sell, the downward trend in bitcoin prices is likely to be even longer.
According to the Coin Telegraph, data in the Glassnode chain suggest that the pressure on bitcoin sales may continue to grow and as a result, the digital currency may face a longer downward trend.
According to the weekly report of the analytical site Golsnood on February 21 (March 2), data aimed at reducing the price of bitcoin have increased during this period and bitcoin buyers are facing significant obstacles.
Researchers of digital currencies say the general weakness of financial markets and existing political problems (the Russia-Ukraine conflict) have led digital asset traders to seek to reduce their investment risk.
“Golsnood researchers said in the report:
The weakness of bitcoin and traditional financial markets shows the risk and lack of confidence that are constantly present in the market. One of the reasons for this risk and lack of confidence is that traders expect US banks to raise interest rates in March. Fears of a Russian-Ukrainian conflict and escalating unrest in Canada and other countries are also involved.
As the downward trend intensifies, the likelihood of a more stable and longer downward trend increases, according to the report. The price of bitcoin has already fallen by 47 percent from its highest level in November, and its overall market trend has been declining over the past 15 weeks.
One of the signs of a downward trend in bitcoin is the lack of activity in the chain in its network. The number of active bitcoin network wallets is at the bottom of the chart channel. The chart below shows the decline in bitcoin intra-chain activity during limited price fluctuations and the decline in the bitcoin market; This means reducing the demand and interest of investors to enter the market.
According to Golsnood, bitcoin investors withdrew about 219,000 wallets last month. This could mean the beginning of an era of money outside the market.
According to the report, the “realized price” or the average price each investor paid to buy their bitcoins for short-term holders is about $ 47,200. As a result, new holders who continue to hold their bitcoins have lost an average of 22 percent at current prices.
The report states:
The more investors are unaware of their trades and the greater their unrealized losses, the more likely they are to spend and sell their bitcoins.
A study of the short- and long-term trading positions in the bitcoin chain shows that 4.7 million bitcoin units have already lost money to their investors; That is, they were purchased at a higher price than current prices. More than half of these transactions, or 54.5%, belong to short-term holders. In addition, these holders are statistically more likely to want to sell their bitcoins.
In the last few days, the posts posted on Twitter have been full of fading emotions, and the index of fear and greed for bitcoin has reached the rank of 20 or “intense fear”.
At the time of writing, the price of bitcoin has fallen 6 percent to $ 36,800 in the last 24 hours. Bitcoin is approaching its lowest level in 2022; That’s the $ 35,000 range. It is worth mentioning that the price of this digital currency last reached this level on January 23.
One of the positive points is that the inactive supply of bitcoin is close to its historical record and more than 60% of the units of this digital currency have not been traded for at least a year. Zhu Soo, co-founder of Terry Investment Capital (3AC), wrote on Twitter that many people who bought their bitcoins in 2017 and 2018 still hold them.
From my personal experience I can say that these people were very modest during that time. They buy less every month, regardless of the price.
The publication In-Chain Data: Short-term holders of bitcoin may sell soon appeared for the first time in digital currency.