The recent downturn in the price of Bitcoin has caught the attention of investors and analysts alike. After months of euphoria following the launch of Spot Bitcoin ETFs in the US market, Bitcoin has finally broken below the $60,000 support level for the first time in two months. This signals a potential shift in market sentiment and a fading of the euphoria that has been driving the price of Bitcoin higher.
According to a report from Glassnode, an on-chain analytics firm, the euphoria surrounding Bitcoin has been active for the past 6.5 months but now appears to be fading. The report indicates that the BTC distribution has entered into the fear zone, with investors heavily weighted towards selling. This has led to a decline in the price of Bitcoin by more than 18% from its all-time high, as investors take profits and sell off their holdings. The rise in the percentage of addresses holding losses further indicates increased selling pressure in the market.
Glassnode’s report highlights the consolidation action in the market, with the Net Unrealized Profit & Loss (NUPL) metric showing that Bitcoin has been in a euphoria mode earlier in this cycle compared to past cycles. While the market has been in a euphoric phase for the last seven months, there has been a cooling off period in the past two months due to correction. The report also notes a distinct uptick in net outflows across all wallet sizes in April, indicating a sell-side pressure among traders.
While the recent “fear” rating may worry investors, many crypto analysts consider a pullback after a steep price rise to be healthy for the market. Long-term holders are still confident in the potential of Bitcoin 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. Many short-term holders have entered into the loss zone as the price of Bitcoin has dropped below their cost-basis.
As Bitcoin continues to navigate through this period of correction and consolidation, it is crucial for investors to stay informed and make well-informed decisions. The market sentiment may shift, but long-term holders are optimistic about the future of Bitcoin. Analysts are closely watching key price levels, such as $59,800, for potential bounce-back opportunities. It is important for investors to conduct their own research and make investment decisions based on thorough analysis and risk assessment.
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