Bitcoin's February Decline Signals Support from Holders and Miners
Despite a drop in price, Bitcoin's miners and long-term holders are showing accumulation, which may indicate potential support.
The opening weeks of February brought concerning news for Bitcoin, with around 43% of its circulating supply reported as being in a state of loss. The quarterly performance shows a decline of nearly 26%, as noted by analyst GugaOnChain. Predictions indicate minimal chances for recovery before April.
On-Chain Metrics Indicate Broad Capitulation
In a recent evaluation of the Bitcoin market by analyst GugaOnChain, a bleak outlook is presented. It reveals that 42.85% of Bitcoin’s circulating supply is currently underwater, and the Net Unrealized Profit/Loss (NUPL) indicator has dropped to 21.30%, indicating a significant presence of fear among investors.
GugaOnChain’s findings were corroborated by insights from XWIN Research, highlighting a rare reading of 8 on the Fear and Greed Index, previously observed during significant stress periods, including the 2018 bear market and the COVID market crash in March 2020.
From a behavioral finance viewpoint, the situation illustrates loss aversion alongside herd mentality, as investors opt to minimize risk following large losses.
Price Movements Reflecting Volatility
Insights from various analytics firms fit into a broader narrative. For example, Santiment reported that funding rates have turned deeply negative, indicating that traders are heavily betting against price increases. Bitcoin’s current price movement reveals a decline of approximately 3% over the past week, 10% over two weeks, and 28% over the month, all while trading close to 46% below its all-time high of over $126,000.
Amidst this market contraction, there remain signs of resilience as accumulator addresses have acquired a total of 380,104 BTC within the past month. Additionally, miners appear to be retaining their holdings rather than liquidating them, aided partly by alternative income streams from AI technologies.
Overall, GugaOnChain’s assessment portrays the current phase of the market as underscored by fear and selective accumulation, with little confidence circulating broadly. He concludes, “The turn towards recovery is now dependent on the resilience of investors.”
