bitcoin has finally broken below $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 the Spot bitcoin ETF in the US market. However, the current bitcoin price consolidation indicates the the euphoria could be fading.
According to a new report from Glassnode, an on-chain analytics company, the euphoria surrounding bitcoin, which has been active for the past 6.5 months, appears to be fading. At the same time, btc distribution has entered the fear zone and investors are now very inclined to sell.
Selling pressure increases
After reaching an all-time high of over $73,737 in March 2024, bitcoin has fallen more than 18% as investors take profits. This price drop has been accompanied by an increase in the percentage of addresses making losses, indicating increased selling pressure. The percentage of addresses making profits has btc” rel=”nofollow”>fallen in tandem from over 99% to 86% at the time of writing this article.
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On-chain analytics platform Glassnode noted in its recent report the consolidation action. According to the net unrealized profit and loss (NUPL) metric, bitcoin has been in a euphoria mode very early in this cycle compared to previous cycles. Notably, NUPL broke above 0.5 about 6.5 months before the halving that had just concluded amid the hype over bitcoin spot ETFs.
This compares to the 2021 market cycle, where NUPL entered a profit zone 8.5 months after the bitcoin halving. This metric suggests that the market is still in its euphoria phase over the past seven months, but has cooled down significantly. due to correction in the last two months.
Interestingly, the report noted a “notable increase in net outflows” across all wallet sizes throughout April, indicating the current sentiment among traders. This means that traders are now under selling pressure across the board. Furthermore, most short-term holders (one week to one month) have been posting losses at the 90-day +1 level since March.
<img decoding="async" class="alignnone size-medium wp-image-606041 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Euphoria-Cools-As-BTC-Distribution-Enters-Fear-Zone.png" alt="bitcoin” width=”460″ height=”259″ srcset=”https://www.newsbtc.com/wp-content/uploads/2024/05/Bitcoin_bb1e4e.png?w=512 512w, https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-Euphoria-Cools-As-BTC-Distribution-Enters-Fear-Zone.png 460w” sizes=”(max-width: 460px) 100vw, 460px” loading=”lazy” data-recalc-dims=”1″/>
Source: Glassnode
What does this mean for bitcoin?
While the “scary” rating may worry investors, most crypto analysts consider a pullback healthy after such a steep price rise. Many long-term holders are still bitcoin-3-metrics-solid-healthy-bull-market/” rel=”nofollow”>holding strong and they are waiting for the halving effect to take effect. At the time of writing, bitcoin is trading at $59,899 and is down 5.35% in the last 24 hours.
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Considering that the current cost basis for short-term holders (STH) is $66,700 and their realized price is $59,800, many more holders in this cohort may have entered the loss zone.
According to cryptanalyst Ali Martínez, $59,800 is a key price level One has to watch, as history has shown that bitcoin tends to bounce above the realized price of STH.
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btc price falls to $57,000 | Source: BTCUSD on Tradingview.com
Featured image from CryptoSlate, chart from Tradingview.com
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