By Nathalie Voit
A startling 40% of Bitcoin investors are now underwater, new data from blockchain analytics firm Glassnode found.
Within the last month alone, 15.5% of all Bitcoin investments sank into an unrealized loss as the decentralized digital currency turned bearish from its all-time high of $69,000 in November, Glassnode said. As of close-of-day May 10, the world’s most popular cryptocurrency is trading at $30,737.80, 45% off from its peak in November and about 27% below its selling price one month ago.
Overall profitability in the network is now less than 60% as the price of Bitcoin hinges near the low $30,000s. A case study from Glassnode found that when the price of Bitcoin hit $33,600 per unit, 40% of investments turned negative. As the cryptocurrency price has edged even lower over the last few days, an even greater share of investments are in the red.
Short-term holders, especially those who bought the cryptocurrency when it was trading near its November all-time high, were much more likely to be underwater on their investment. According to the group, long-term holders were less likely to accrue a paper loss.
“This decline in profitability is the fourth most severe over the last three years,” Glassnode said in a newsletter released on May 9, referring to the percentage of the Bitcoin network that has fallen underwater over the last 30 days, which is 15.5%.
However, the losses are less severe than in July and December 2021, when 18.1% and 19.1% of investments became unprofitable. The network experienced the most significant monthly decline in profitability in March 2020, when 35.4% of the market fell in the red over 30 days.
According to Glassnode, May’s sell-off saw more than $3.15 billion in value moved into or out of Bitcoin exchanges, the largest since November 2021.
Additionally, “a high degree of urgency” was associated with these transactions as investors sought to “de-risk, sell, or re-collateralize their margin positions” in anticipation of a heavy price crash. According to the group, the total value of all on-chain transaction fees paid reached 3.07 BTC during last week’s sell-off, the highest in Glassnode’s dataset and higher than during the December 4 “deleveraging event,” in which the market tumbled 34.5% in one day.
Glassnode also noted the volatile market response to the Federal Reserve’s announcement of further interest rate hikes on May 4.
“Markets initially responded well to the news on Wednesday, with Bitcoin rallying to the weekly high of $39,881. However, the positive momentum was short-lived, with markets selling off heavily on Thursday, and Bitcoin trading down -13.8% to close the week at $33,890,” the group said.