Bitcoin's Bear Market Strains Short-Term Holders

Short-term investors in Bitcoin are feeling significant pressure as the cryptocurrency tumbles below $70,000 once more.

Market Conditions

Current losses are severe for short-term holders as Bitcoin’s price drops drastically.

As mentioned by CryptoQuant analyst ‘Darkfost’ on Wednesday:

“Short-term holders keep suffering as this correction drags on.” The short-term holder cost basis is around $94,200, while BTC has fallen to approximately $67,000, marking a significant 28% gap.

This situation leads to an estimated average unrealized loss of about 28% for short-term holders.

Not a Temporary Drop, But a Bear Market

Analysis indicates that Bitcoin has been trading below the short-term holder cost basis for four months, indicating a sustained period of pressure unlike in previous market cycles. The current trend appears increasingly like a bear market.

“The duration of trading below cost basis suggests we are not simply facing a correction but rather a bear market, which may resemble conditions observed in prior declines lapsing over a year,” noted the analyst.

Fresh Capital Deficit

CryptoQuant further stated:

“The sell-off is not being absorbed by fresh capital… In bull markets, declines attract capital, whereas in bear markets, weaknesses prompt withdrawals.”

Daan from ‘Daan Trades Crypto’ remarked that prices eventually broke through supportive levels, intensifying concerns for the market.

Supporting Trends

Amidst this downturn, Bitfinex analysts reported a slight upturn in Bitcoin’s long-term holder supply, rising to around 14.3 million BTC, proposing it could suggest a reset phase rather than peak valuations.

“If the buildup continues, we could support the theory of a mid-cycle adjustment instead of a final peak.”

Current Bitcoin Pricing

Currently, Bitcoin is priced at around $66,000 after a plunge below that level in late trading. Bitcoin’s companion, Ether, also struggled, pressing below the $2,000 support.

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Stay tuned for updates on market trends and price changes.