• Bitcoin could continue to slump further as on-chain analytics suggest the leading cryptocurrency is in a sustained bear market.
  • A quarter of network entities holding BTC is now in a negative position.
  • The longer-term investors are underwater, the further Bitcoin could fall and more coins would be sold.

Blockchain data suggests that the leading cryptocurrency may be in a sustained bear market as over 4.7 million Bitcoins are now held at an unrealized loss. Several bearish signals indicate that the bellwether cryptocurrency could continue to decline.

A quarter of Bitcoin investors are now underwater

Blockchain analytics firm Glassnode recently noted that there has been decreasing interest and demand for Bitcoin. Over the past month, around 219,000 BTC wallets have been emptied.

According to Glassnode, the recent spending behavior could be due to the financial cost and psychological pain of holding an investment that is underwater. The proportion of on-chain entities in profit ranges between 65.78% and 76.70% of the network, meaning over a quarter of all network entities are in a negative position.

The report further noted that the recent decline in Bitcoin price may be due to the broader market uncertainty surrounding looming interest rate hikes by the Federal Reserve and the conflict in Ukraine. 

According to Glassnode, Bitcoin price may continue to decline as the longer-term investors are underwater on their position, the further BTC will fall into unrealized loss, and more likely those coins held will be spent and sold.

However, the supply-side dynamics of the recent downturn look relatively optimistic compared to previous bear markets. Long-term investors are seemingly more likely to hold their coins and use derivatives to hedge risk rather than sell their crypto assets.

Bitcoin price tests last crucial support

Bitcoin price has formed a symmetrical triangle pattern on the daily chart, suggesting that the leading cryptocurrency could continue to consolidate.

The bellwether cryptocurrency will test the critical line of defense at $36,930, where the 78.6% Fibonacci retracement level meets the lower boundary of the governing technical pattern. Additional selling pressure may see Bitcoin price tag the January 22 low at $34,011. 

BTC

BTC/USDT daily chart

However, if buying pressure increases, Bitcoin price could aim for the 50-day Simple Moving Average (SMA) at $40,501.

 


Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended Content

Editors’ Picks

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC declines as resistance emerges near all-time high

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC declines as resistance emerges near all-time high

Bitcoin and Ethereum are approaching their key support levels, and a sustained close below these marks could lead to further declines. 

More Cryptocurrencies News
TON set to launch synthetic Bitcoin to boost its DeFi solutions

TON set to launch synthetic Bitcoin to boost its DeFi solutions

TON revealed its plan on Thursday to launch a synthetic Bitcoin token on its blockchain, allowing users to trade, stake, and earn yield using BTC. Following the announcement, TON is down over 3%.

More Ton News
Maker Price Forecast: MKR could stage 40% rally

Maker Price Forecast: MKR could stage 40% rally

MakerDAO is up 2% on Thursday and could be set for a 40% rise in the coming weeks if it successfully maintains an extended move above the descending trendline of a falling wedge. On-chain data also supports the bullish outlook after a four-month-long decline.

More MakerDAO News
USDT market cap crosses $120 billion as stablecoins continue their uptrend

USDT market cap crosses $120 billion as stablecoins continue their uptrend

The stablecoin market cap continued its uptrend in October, characterized by USDT reaching a $120 billion market cap, according to a CCData report on Thursday. This indicates that investors are preparing liquidity to fuel more demand.

More USDT News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP