As an experienced on-chain analyst, I’ve closely monitored Bitcoin’s price movements and trends for quite some time. The recent dip below the average purchase price paid by short-term holders has understandably sparked anxiety among this group of investors, as they now face unrealized losses.
According to on-chain analysis, the current Bitcoin (BTC) market price is lower than the average purchase price for short-term holders. This situation might be prompting anxiety among these investors due to potential unrealized losses.
In a May 1st report, analyst James Check, also referred to as “Checkmatey,” pointed out that the most current purchasers have the highest statistical probability of experiencing panic.
“We’ve got quite a development with Bitcoin dipping by 8% to hit $56,814 on the first of May, as reported by CoinMarketCap.”
In the past few days, Bitcoin experienced a notable decrease in value, reaching its lowest point since February. This is relevant information for short-term investors, specifically those who bought Bitcoin within the last 155 days, as their average purchase price was approximately $59,600 per Bitcoin.
I’ve analyzed the current market situation and found that despite the price rebounding to $57,631 as of this writing, short-term investors have an average unrealized loss of around 3%.
The price of Bitcoin has dropped by 4% within the last 24 hours, resulting in a liquidation of approximately $100.27 million worth of long positions, according to data from CoinGlass.
The crypto sell-off caused the price decrease, with investors holding back during the Federal Reserve’s rate announcement, which ultimately did not change the existing high-interest rates contrary to predictions by analysts.
As a researcher studying the Bitcoin market, I’ve observed that enduring an unrealized loss isn’t the most desirable situation. However, it’s important to note that this experience is not new to short-term holders of Bitcoin. They’ve encountered such situations in the past.
“The crucial point is that shattering the short-term cost basis doesn’t signify the demise of the world or the bull market. Although it doesn’t aid the situation, it’s important to note that such occurrences have been recoverable in the past.”
In simpler terms, the cost basis for short-term crypto holders often functions as a floor price during uptrends and a ceiling price during downtrends, according to On-Chain College’s explanation in a recent Reddit post from May 1st.
However, it pointed to a few potential events that will not signal “the bull market is over.”
Making a swift advance to approximately $59,600, which is around a 2.2% increase from Bitcoin’s present value, would signify a bullish trend according to the On-Chain College’s assessment.
In June 2023, the price dipped below its cost basis only to bounce back swiftly, paving the way for a substantial price increase.
When Bitcoin‘s price retreated a few months later in August 2023, it remained unstable and hovered below its short-term purchase cost for an extended period.
A prolonged dip beneath the initial purchase price might indicative of a bullish market trend, as suggested by On-chain College.
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2024-05-02 06:21