Bitcoin’s recent price movement has seen the cryptocurrency breaking below the $60,000 support level for the first time in two months. This shift comes after a period of euphoria in the market, fueled in part by the launch of Spot Bitcoin ETFs in the US. However, a new report from Glassnode, an on-chain analytics firm, suggests that this euphoria may be starting to fade. The report indicates that the BTC distribution has entered a fear zone, with investors showing a heavy bias towards selling. This change in sentiment is reflected in the percentage of addresses holding losses, which has increased as the price of Bitcoin has dropped by more than 18% from its all-time high.
Glassnode’s recent report also highlights the consolidation phase that Bitcoin is currently in. The Net Unrealized Profit & Loss (NUPL) metric shows that Bitcoin entered the euphoria phase much earlier in this cycle compared to past cycles. This suggests that the market has been in a state of euphoria for the past seven months, but has cooled off due to recent corrections. The report also notes a significant increase in net outflows across all wallet sizes in April, indicating a sell-side pressure among traders.
While the fear rating may cause concern among investors, many analysts view a pullback after such a steep price rise as a healthy correction. Long-term holders of Bitcoin are still holding strong, waiting for the halving effect to take place. As of the time of writing, Bitcoin is trading at $59,899, down by 5.35% in the past 24 hours. Short-term holders, whose cost basis is around $66,700, are experiencing losses as the realized price of Bitcoin falls below this level. Analysts like Ali Martinez point out that $59,800 is a key price level to watch, as historical data shows that Bitcoin tends to bounce back from this level.
The recent price movement of Bitcoin reflects a change in market sentiment from euphoria to fear. While this shift may be concerning to some investors, it is important to note that corrections are a natural part of any market cycle. As always, it is crucial for investors to conduct their own research and make informed decisions when it comes to investing in cryptocurrencies. The volatility of the market means that prices can fluctuate rapidly, and it is essential to stay informed and exercise caution when trading digital assets.
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