Bitcoin has not yet formed a resilient bottom: Glassnode
The world’s largest cryptocurrency recorded one of the worst monthly price gains in history in June. This month has also been kind to it. The current market structure has many characteristics of the later stage of a bear market. And although many bottom formation signals have formed, Bitcoin has not yet established a “resilient” one that can finally break the series of correction.
Redistribution of wealth
During the long downturn in the market, Glassnode observed a redistribution of wealth among stakeholders. In short, Bitcoin wealth is currently being distributed from weak hands to strong hands as a result of the ongoing capitulation from retail investors and miners. This potentially indicated that a much-needed bottom may not be very far.
But with the price below the $ 30k level, miners and long-term holders (LTHs) have come under considerable stress. According to a recent report from the blockchain analysis firm, the share of supply that this group of holders held reached over 34%, while the amount owned by short-term holders or STHs plummeted to only 3% to 4% of supply.
It is always the LTHs that pay the most in the form of massive unrealized losses. The short-term owners now have just over 16% of the offer in the loss. This suggests that newly redistributed coins must now undergo the “maturation process in the hands of holders of higher conviction.”
“This indicates that while many bottom formation signals are in place, the market still requires an element of duration and time pain to establish a resilient bottom.”
Miner capitulation in progress
During the late bear market, miners become an integrated source of sales pressure as a result of the cyclical nature of income. Bitcoin miners are currently under income stress with earnings of only 49% as much as the average of 12 months.
Due to the income stress of the miners, Glassnode observed a total distribution of 7.9k BTC from their treasuries over two months. Despite this, it is also important to note that miners have slowed down consumption lately and instead distribute from their stored state coffers at a rate of 1.35k BTC / month.
The latest figure suggests that miners have around 66.9k BTC collected in their treasuries. If the price fails to see any meaningful improvement, the risk of further distribution persists in the next quarter.
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