Bitcoin Plunges Below $60,000 but Remains in Good Shape

Since the beginning of June, Bitcoin seems to be stumbling. Despite fierce resistance, the flagship crypto has still not managed to surpass the $60,000 mark. This stagnation worries both seasoned investors and newcomers. Today, let’s dive into this worrying situation and analyze the key elements of Glassnode’s latest report to understand the ins and outs of this crisis.

Bitcoin: A Measured Decline

Bitcoin has recently plummeted, recording a drop of 26% from its all-time high of over $74,000. This decline, while significant, remains less deep than in previous cycles, as highlighted by the Glassnode report:

“While this is significant, this downward trend has been notably less deep than previous cycles, highlighting a relatively robust underlying market structure.”

In other words, the strength of the Bitcoin market remains undeniable, despite the current turbulence.

Short-term holders are particularly affected, with more than 2.8 million BTC currently below their acquisition price. This is a hard hit for these investors who see their profitability evaporate.

However, Glassnode tempers: losses remain moderate relative to the total market size. The market structure seems to be evolving, with volatility compressing, a sign that Bitcoin is stabilizing as a mature asset.

Crypto: Between Influx of New Investors and Saturation

The crypto universe is not left behind, with a massive influx of new investors starting January 2024, notably thanks to the launch of spot ETFs. However, this initial enthusiasm quickly waned, creating an overabundance.

Glassnode’s report notes:

“Demand has peaked, leading to an overabundance, as fewer long-term holders are taking profits and fewer new buyers are accumulating BTC.”

This situation has led to a market saturation, where more than 2.8 million BTC are below their cost base, marking the second occurrence in a year where more than 2 million BTC are ‘underwater’.

The financial pressure on short-term holders is palpable, but remains moderate in proportion to the total wealth invested.

Glassnode concludes: “The losses recorded by this cohort remain fairly typical compared to previous bull market corrections.”

In conclusion, although Bitcoin and the crypto world are going through a tumultuous period, the strength of the market remains notable. The long-term prospects remain cautiously optimistic, with the hope of a demand recovery to stabilize prices and bring the flagship crypto back to life.