Is Long-Term Bitcoin Holders In Panic Now?
With Bitcoin in the midst of its biggest slump in years, analysts are sifting through a slew of indicators to determine when more investors may leave the cryptocurrency market.
According to UBS, Bitcoin plummeted as low as $22,603 on Monday, placing it precisely below the average investor cost base of $23,500. That implies prices have fallen low enough to put even long-term investors to the test, who were mainly profitable up to the 2022 slump.
“Bear-market blues have set in among even the most ardent crypto proponents,” said James Malcolm, head of foreign exchange and crypto research at UBS. “Capitulation can come in many forms. Equally, relief too as we are now in full-blown panic mode, and the bar for a hawkish Fed this week is pretty high.”
Miners, whose companies have been under severe pressure because to high energy costs and capex commitments, might start capitulating and selling down their current coin holdings.
Bitcoin hit its lowest point since the end of 2020 after a 17% drop at the start of the week. Other cryptocurrencies were in the dumps as well: the MVIS CryptoCompare Digital Assets 100 Index, which tracks 100 of the most popular tokens, fell as much as 17%, its lowest level since December 2020.
Meanwhile, both the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF have lost more than 20% of their value since their beginnings in late 2021. MicroStrategy Inc.’s stock has dropped by more than 25%.
Although the broader market remains under pressure after an inflation print came in hotter-than-expected last week, meaning that the Federal Reserve will have to be aggressive in its attempts to cool rising prices, digital-asset investors have been spooked in part by the crypto-lender company Celsius pausing withdrawals, swaps, and transfers.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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