Bitcoin owners should brace themselves for further price declines
According to Glassnode, Bitcoin (BTC) investors should still expect a further drop in price because the bottom has not yet formed completely.
Bitcoin's price may have dropped by more than 72% from its all-time high and recently steadied around the $20,000 mark, but a comparison to the previous bear market revealed that the bottom has yet to be formed.
Bitcoin's tipping point
During the bear market that lasted from December 2017 to March 2019, Bitcoin reached its breaking point at around R108K. This bear market's breakpoint was R509K when Bitcoin's value dropped by more than 40% in two weeks.
Furthermore, a redistribution of wealth occurred as a result of falling prices during the 2018 bear market. The same thing is happening in the current bear market, with fresh purchasers entering the market around the R339K mark while long-term investors sell.
Long-term investors losing money
Long-term holders, according to Glassnode, have been under pressure since Bitcoin's price dipped below R509K. The report calculated profitability based on actualized losses and coins retained below cost (unrealized losses).
According to the blockchain analytics firm, the Long-Term Holder Spent Output Profit Ratio (SOPR) is 0.67. The average long-term holder spending has a 33 % actualized loss, while those hodling have a -14 % unrealized loss.
Bitcoin (BTC) investors should still expect a further drop in price because the bottom has not yet formed completely, according to Glassnode.
Bitcoin's price may have dropped by more than 72% from its all-time high and recently steadied around the 339KR mark, but a comparison to the previous bear market revealed that the bottom has yet to be formed.
Short-term investors remain active in the market
According to Glassnode, at prior bear market rock bottoms, long-term holders typically controlled more than 34% of Bitcoin supply, while short-term holders held 3-4% of the supply.
Short-term holders currently possess approximately 16% of Bitcoin's supply, indicating that there is still potential for a maturation time to test their conviction. This also implies that the bear market's bottom has not yet been formed.
Miners
According to the report, miner capitulation is also currently in play. If the price falls, there is a potential that additional miner capitulation may occur in the coming quarter. Glassnode went on to say that miners' capitulation in the 2018-2019 bear market lasted almost four months, whereas the current one has just lasted a month.
According to the blockchain analytics business, the volume of Bitcoin supply in loss reached 44.7 %, which is less severe than in prior bear markets. As a result, more declines are possible until Bitcoin establishes a stable bottom.
