Where Will Bitcoin’s Next Stop Be?

While the overall cryptocurrency market has rebounded somewhat following the sudden collapse of FTX, a new report shared by Glassnode evaluated whether the continued selling of Bitcoin (BTC) represents a continuation of the downtrend.

The on-chain analytics platform has found that all groups of Bitcoin (BTC) investors are turning to cryptocurrency after the recent price drop. Glassnode evaluated BTC’s Propensity to Hold metrics and found that the recent increase in savings after significant sales could be linked to 2018. This change of behavior has also followed many major selling events, such as the COVID crash in March 2020, the Terra (LUNA) crash in May 2022, and June 2022, when the price dropped below $20,000 for the first time. One group of investors that perfectly exemplifies the hoarding trend is the owner of less than one Bitcoin (BTC), known as shrimp. Glassnode said the following on the subject:

“It has seen two significant ATH balance gains in the last 5 months. Shrimps has added +96.2k Bitcoin (BTC) to its holdings since the collapse of FTX and currently holds 1.21 million digital assets. This is equivalent to a non-trivial 6.3% of the circulating supply.”

New Investors Hit!

Glassnode went even further to assess the status of new Bitcoin (BTC) investments following the FTX debacle. Glassnode observed the relationship between the cost basis of short-term holders and the spot price of $18,830,000, finding that “the average end buyer is -12% underwater.”

Glassnode noted that new buyers have a superior entry point to the average owner, while sellers found that the current Bitcoin (BTC) market is nearing exhaustion, with massive distribution being met with an equal amount of savings. According to Glassnode, this gives new buyers an advantage by pulling the STH Cost Basis below the Actual Price.

Data Breaks Record!

A look at BTC’s Adjusted MVRV Ratio reveals that the current Bitcoin (BTC) market is at its lowest level “since the pico-bottom set in December 2018 and January 2015”. When this metric is less than one, it means that the active market is at a collective loss. Glassnode found that this metric has reverted to 0.63.

“This is very important as only 1.57% of trading days in Bitcoin history record a lower Adjusted MVRV value.”

An assessment of BTC’s aSOPR metric revealed that “the losses incurred are also of historical magnitude.” Glassnode, on the other hand, ended with these words:

“The recent market reaction to FTX sales manifested itself as an aSOPR reading that fell below the low band for the first time since March 2020. Again, the significance of this event can only be compared to the COVID crash and market capitulation. (December 2018)”