Bitcoin profitability for long-term holders drops to 4-year low: Data
Bitcoin’s (BTC) long-term profitability has fallen to levels last seen during the previous bear market in December 2018. According to data shared by crypto analytics firm Glassnode, BTC holders are selling their tokens at an average loss of 42%.
The Glassnode data indicates that long-term holders of the top cryptocurrency selling their tokens have a cost basis of $32,000, meaning the average purchase price for these holders selling their stack is over $30,000.
The current market downturn contributing to the falling profitability can be attributed to several macroeconomic factors. The BTC market continues to have a strong correlation with the stock market, especially tech stocks, which are currently seeing an even bigger downtrend than crypto.
The rising inflation added to the central banks lack of control over it has also contributed to the pain of BTC investors. With much less to invest in their hands, traders and long-term owners are shifting to short-term profitability and less risky assets.
This was evident from the selling of BTC miners as well, BTC miners have historically been long-term owners in anticipation of a higher profit. However, the increase in energy costs, added to the increasing difficulty of mining, has reduced the profit margins of these miners, forcing them to settle for short-term profits.
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The Bitcoin miner balance has seen large outflows since prices rejected from the local high of $24.5 thousand, suggesting that overall miner profitability remains under some degree of stress. However, while mining has ranged between 3,000-8,000 BTC, market data indicates that a price drop to $18,000 could lead to a monthly outflow of 8,000 BTC.
Bitcoin, the top cryptocurrency, is currently trading in the $19,000-$20,000 range, struggling to conquer the $20,000 resistance despite several breakouts above it in the month of September.
The long-term ownership profitability added with mining profitability has reached a multi-year low. However, the levels are quite similar to when the crypto market bottomed during previous cycles.
Bitcoin is currently trading in the $19,000-$20,000 range, struggling to conquer the $20,000 resistance despite several breakouts above it in the month of September. The top cryptocurrency is currently trading at a 70% discount from its market peak of $68,789 posted last November.
