Blockchain data show that the correction in the bitcoin market, which reduced the price of the digital currency by more than 40% from its peak at $ 64,000, may be due to sales due to the panic of investors who have bought in the recent bullish market. Professional traders are said to be buying more in the fall.
to the the report CoinDesk, Blockchain Data Analysis Company Glassnode wrote in a post on Monday:
The bitcoin market is in a historic milestone. There are strong signals that short-term investors drive by fear-based sales.
Initially, the sharp drop came after Tesla CEO Elon Musk tweeted. He did not initially openly deny that his electric car company had sold or would soon sell all of its $ 1 billion bitcoin. Musk later stated that Tesla had not sold its bitcoin assets.
Ilan Musk announced Wednesday that Tesla is no longer accepting bitcoin as a method of payment because of concerns about its impact on the environment. Trading data show that the price of Bitcoin fell by almost 13% or more than $ 7,000 that day at the Coin Base exchange.
In his post Monday, citing several key Blockchain data metrics, Glasnood said the market reform is due to investors who are selling out in panic.
According to Glasnood, the short-term SOPR index, which is determined by the currencies held in less than 155 days, has dropped to less than 1. This means that new entrants to the market have panicked and suffered significant losses.
The SOPR index measures the net profit / loss position of ongoing bitcoins. A value of less than one indicates that each bitcoin traded on that day sold at an average loss. At the time of writing, although the SOPR of long-term holders is declining, it is still above 4.
Meanwhile, the number of bitcoin accumulation addresses is increasing, according to GlasNow Post; The number of addresses with non-zero inventory has decreased by about 2.8%. This indicates that long-term owners are buying after the recent price reduction.
According to Glass Node, although the price of Bitcoin is still higher than in the last bullish market, it requires a larger capital inflow for a full price recovery.
On the other hand, Blockchain data show that the current price correction could indicate a pullback over a larger period of time in an uptrend.
Glass Ninety says:
Low-income investors give in, and strong investors start collecting cheaper coins again.