By Kate Irwin
2 min read
The Bitcoin selloff from Thursday to Saturday marked the largest realized loss ever for the top cryptocurrency by market cap, with investors recording $7.3 billion of locked-in losses.
About 555,000 Bitcoin were traded in the $18,000 to $23,000 range during the three-day span, with many sellers having originally purchased BTC at much higher prices, according to research firm Glassnode.
Short-term holders reached a Spent Output Profit Ratio equal to that of the 2018 bear market, meaning their profits are down overall, while some long-term holders experienced “deep capitulation” after buying at Bitcoin’s all-time high of nearly $69,000 and selling for closer to $18,000, per Glassnode.
“Almost all wallet cohorts, from Shrimp to Whales, now hold massive unrealized losses, worse than March 2020. The least profitable wallet cohort hold 1-100 BTC,” Glassnode reported.
GlobalBlock cryptocurrency analyst Marcus Sotiriou said Bitcoin may be near a temporary bottoming out point because the cryptocurrency has historically bottomed out when its Percent Supply in Profit (PSP) is 40% to 50%.
“It is important to note when looking at this historical data, that Bitcoin has not gone through a period of persistent inflation,” Sotiriou said in a statement Monday. “We may be edging closer to a generational bottom as more forced liquidations occur, but we can not be confident of a sustained uptrend until inflation convincingly slows down.”
Yuya Hasegawa, an analyst at Japanese cryptocurrency exchange Bitbank, also sees more potential downside given that Bitcoin’s PSP is just above 50%.
“Bitcoin’s weekend dip was, to put it simply, not deep enough,” Hasegawa wrote in a report Monday. “Bitcoin still has a downside potential but if its PSP goes below 50%, then the price could finally bottom out.”
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