Data from on-chain analytics firm, Glassnode, reveals that more than half of Bitcoin wallet addresses existing are still in profit, raising questions about the severity of the current market sell-off we are experiencing as Bitcoin over the weekend fell below $20,000.
Glassnode confirmed that as of June 20, 56.2% of wallet addresses were still worth more in U.S. dollar terms than when their coins entered them.
As BTC fell to 19-month lows of $17,600 over the weekend, analysts bracing for what they assume will turn out to be a retracement of up to 84.5% from all-time highs. However, a sense of confusion reigns this year thanks to those highs not being “high enough” compared to historical bull market tops.
What you should know
- The subsequent drawdowns seen this year have taken many analysts by surprise, despite so far not matching previous bear markets.
- The Glassnode figures support that idea. BTC price bottoms have tended to coincide with less than half of addresses remaining in profit, and as such, the current downtrend still has a way to go if it is to fit in with historical patterns.
- This is because in March 2020, for example, profitable addresses dropped to 41%, and before that, the 2018 bear market also saw a drop below the 50% mark. Should this trend repeat itself, it means that there is a high possibility of Bitcoin falling below $15,000.
- Panic, however, may already be setting in. As Nairametrics reported, realized losses seen is at a record level of $7.3 billion.
- June 13 saw the largest on-chain realized losses in Bitcoin’s history, these hitting $4.76 billion in a single 24-hour period.
On the topic of how much selling needs to take place before the market reverses, Dylan LeClair, senior analyst at UTXO Management, eyed a split between retail and derivatives traders. He explained that in times gone by, he argued this week, retail has sold first and speculators come in to finish the process by shorting BTC to unnaturally low levels. LeClair concluded by adding that more liquidations are likely necessary in the DeFi space before a definitive bottom can be put in.