Bitcoin Struggles To Stay Above $20,000 As BTC Balances On Exchanges Hit Critical Lows ⋆ ZyCrypto
   
Despite breaking crucial support at $20,800 and digging in, Bitcoin managed to recover and maintain its guard above the physiological $20ki area for most of the week. Last week, the top cryptocurrency tried to make a comeback after a devastating sell-off on the 19th.th August, but only managed to spend $21,800 before plunging further.
Over the past four days, Bitcoin has hovered between $20,500 and a multi-week low of $19,500, even as the Fed’s hawkish stance and soaring inflation in Europe continued to weigh on investors. At the moment, most fundamental metrics continue to suggest short-term weakness for Bitcoin with investors looking for exit liquidity at every available opportunity.
According to Glassnode, Bitcoin is “barely hanging on” while the cryptocurrency’s user base performance remains subdued. “The current performance of the Bitcoin user base is weak at best, and this price action remains remarkably weak, even as spending on older coins slows,” That’s what Glassnode wrote in its latest weekly newsletter.
According to the report, Bitcoin investors are still stuck in a losing streak with a net loss of around 220 million per day. However, the situation has improved compared to recent multi-billion capitulation events.
A quick review of the SOPR metrics also shows that things are not looking rosy. SOPR helps users discern average profit or loss multiples on used coins. Currently, the adjusted SOPR remains below the 1.0 value after retesting it and turning south last week. This rejection is also reflected in the sales in mid-August.
“The recent selloff was initiated after a convincing underside test of 1.0 at a time when prices reached over $24k. Rejection from this level largely confirms the weaknesses going forward, as investors took the exit liquidity and spent coins around the acquisition cost basis.” Glass node added.
However, the metric has remained in the 0.60 to 0.65 region for several consecutive weeks with long-term owners locking in losses between -35% and -40%. Compared to the -50% peak losses in 2018, this indicates that long-term owners are willing to hold onto their coins in the hope that a move from SOPR above 1.0 could lead to a meaningful price recovery.
Investors also continue to withdraw their Bitcoins from exchanges, despite prices falling. According to data from Santiment, the total number of BTC sitting on exchanges is down to just 1.74 million, marking a systematic decline of over 40% since March 2020.”During downtrends, it is known to see long-term hodlers making up a larger percentage of the total supply.” wrote Santiment on Wednesday.
That said, it remains plausible that the crypto market is in its darkest bearish phase and that Bitcoin could see a sustained rally if fundamentals turn green. At the time of writing, Bitcoin was trading at $20,101 after an increase of 0.71% in the last twenty-four hours.
