Bitcoin price crash has left 40% of investments under water

Bitcoin price crash has left 40% of investments under water

Bitcoin price crash has left 40% of investments under water
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Traditional and cryptocurrency markets have been in free fall for several days, plunging into bear territory when assets are trading at 20% or more below their previous high. The S&P 500 has lost 15% this year, while half of the Nasdaq index’s equities have lost more than 50% from their highs.

Bitcoin has dropped even more. The popular cryptocurrency is currently selling at $32,000, down roughly 55% from its November top of $69,000. For many Bitcoin investors, this means their portfolio has gone negative.

Only 60% of Bitcoin investments remained lucrative when the cryptocurrency was priced at $33,600 per unit, according to analysis from blockchain analytics startup Glassnode.

The remaining 40% of investments were lost to the water. As Bitcoin’s price has plummeted even further, hovering between $31,000 and $32,000, a growing number of investments have lost money.

“This decline in profitability is the fourth most severe over the last three years,” Glassnode was referring to the 15.5 percent of total investments that became unprofitable in the last month alone.

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In July and December 2021, the number of profitable Bitcoin network investments fell 18.1 percent and 19.1 percent, respectively, marking the third- and second-worst monthly declines ever. According to Glassnode, the largest monthly drop in profitability occurred in March 2020, when 35.4 percent of the market lost money in 30 days.

According to Glassnode, Bitcoin’s sudden price drop is being driven by “shrimps and whales” racing to get money out of the market, implying that investors with small and large stakes in the cryptocurrency are all attempting to avoid the crash.

According to Glassnode, there has been a “high degree of urgency” associated with Bitcoin transactions over the last week. The total value of transaction fees has surpassed the previous high set during the December crypto crash.

More than $3.15 billion in value has moved “into or out of” Bitcoin exchanges in the last week, according to the group, the highest dose of liquidity since November 2021, when exchange flows peaked.

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However, not everyone is selling. Some investors are still “hodling” their stake—an insider term for holding on to a position—or even strengthening it by buying the dip and rushing into the weaker market. El Salvador’s president announced on Monday that his government had purchased 500 Bitcoin, which he made legal tender in September of last year.

Smaller investors—those holding less than one Bitcoin—have been the “strongest accumulators” of cryptocurrency during the selloff, according to Glassnode, but even that group of retail-level diehards is buying at a slower rate than before.

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