By
Steve Muchoki
April 19th, 2024
Bitcoin has been showing weakness as per key on-chain metrics with Monday’s price crash. Market analysts chart some crucial support levels and expect BTC to remain under pressure over the next month.
On Monday, May 17, there was a bloodbath at Satoshi Street with Bitcoin (BTC) price crashing over 10% slipping under $42,500 levels. Although Bitcoin has regained partially, it continues to stay under pressure as of now. At press time, BTC is trading at $44,871 with a market cap of $840 billion. However, there’s been a clear trend observed with panic selling in Bitcoin and the overall crypto space. During Monday’s panic selling, short-term Bitcoin holders booked major losses. On the other hand, the long-term Bitcoin holders and miners continued buying the dips.
As Warren Buffett rightly says, money in the market “moves from the impatient to the patient”. The Monday Bitcoin price crash came as Elon Musk raised major speculations of Tesla selling its Bitcoin holdings. With Tesla dropping BTC payments last week, the world’s largest crypto has stayed under pressure.
On-chain data provider Glassnode has presented us with some interesting charts that show how the net miner position and the net long-term holders position continue to rise.
The story of this #Bitcoin dip in 4 charts ⛓️
Most of the on-chain volume came from short-term holders that ended up capitulating at a loss 🪦
Meanwhile, long-term holders & miners are stacking sats at an increasing pace, clearly buying the dip 💪 pic.twitter.com/TSa37T17nV
— Dilution-proof (@dilutionproof) May 17, 2021
Besides, the number of Bitcoin addresses with non-zero addresses has also dropped significantly. As Glassnode reports:
“The total count of addresses holding a non-zero BTC balance has also pulled back by -2.8% from the recent all time high of 38.7M addresses. A total of 1.1M addresses have spent all coins they held during this correction, again providing evidence that panic selling is currently underway.”
On-chain SOPR Metrics and Bitcoin Panic Selling
The SOPR or Spent Output Ratio measures the net profit and loss position of the outstanding Bitcoins. The “short-term holder SOPR,” or STH-SOPR is denoting coins that are younger than 155 days. The STH-SOPR dropped below the key threshold of 1 as per Glassnode.
The drop of the SOPR below 1 suggested that short-term holders resolved to panic selling thereby making significant losses on their investments. As said earlier, long-term holder shave continued to accumulate during these price dips. As Glassnode data shows, the number of accumulation addresses surged during the price crash.
Many folks in it for the long term #Bitcoin https://t.co/WKDb1ndEvN pic.twitter.com/1cyQpZ4ZdI
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) May 17, 2021
Market analysts, however, note that the BTC price hasn’t yet reached its bottom and expects further price crash going ahead. Evercore ISI’s Rich Ross told Bloomberg that the Bitcoin price is likely to down further taking support at the 200-day moving average i.e. $40,000.
Tallbacken Capital Advisors LLC Chief Executive Officer Michael Purves, also noted: “The momentum has now quite decisively shifted to the bears”. Purves further adds that $42,000 is a crucial support for Bitcoin. If it fails to hold above it, we are bracing for further losses.
In a word with Bloomberg, Wall Street veteran and Galaxy Digital founder Mike Novogratz stated that BTC will continue to remain under pressure at around $45,000 levels for the next six weeks. “I think we are going to consolidate for a while, four to six weeks,” he said.