Glassnode, a blockchain analytics provider, has shown a bearish Bitcoin scenario. On-chain metrics indicate that increased selling pressure is likely.
Glassnode, a provider of on-chain metrics, stated that Bitcoin bulls are “facing a number headwinds” in its weekly analysis report of February 21. This refers to growing bearishness in network data.
Researchers cited the weakness of the mainstream markets and wider geopolitical issues to explain the current risk-off attitude towards crypto assets.
“Weakness in Bitcoin and other traditional markets reflects the persistence risk and uncertainty associated Fed rate increases expected in March, fears about conflict in Ukraine, and growing civil unrest elsewhere in Canada.”
The report stated that the probability of a longer-lasting bear market increasing as the downtrend intensifies is also possible. Bitcoin is currently trading at 47% below its November high. It has been trending down for the past 15 week.
One sign that a bearish Bitcoin markets is a lack of activity on-chain is a lack of it. The current number of active entities or addresses is at the lower bound for the bear market channel. This indicates that there has been a decline in interest and demand during downtrending or sideways markets.
Active on-chain entities: Glassnode
Glassnode reported that 219,000 addresses were emptied in the last month, suggesting that this could signal a period when users are leaving the network.
It computed a short-term holder realized cost price which came out to $47,200. This means that current prices are losing around 22% on average for those who still own the asset.
Investors will likely spend the coins they have held if they are in a worse financial position.
Other measurements of short-term and long-term on-chain positions led to the conclusion that there are currently 4.7 million BTC underwater. It was found that 54.5% of the total is held by short-term holders, which are less than 155 days. These holders are statistically more likely than others to spend it.
Related: Coin days destroyed spike suggests bottom of BTC price Five things to keep an eye on in Bitcoin this week
Over the past few days, Crypto Twitter has been filled with bearish sentiment. The Bitcoin Fear and Greed Index currently registers a 20 — “extreme Fear”
Cryptocurrency is not for everyone. Here are some quick thoughts about the consequences of a bearish market.
— Jason Choi (@mrjasonchoi), February 21, 2022
According to CoinGecko, BTC prices have fallen 6% in the last 24 hours to trade at $36,738 as of the time this article was written. Bitcoin prices are now very close to their lowest level in 2022, when it was just above $35,000 on January 23.
Cointelegraph reported on February 19 that the inactive Bitcoin supply has reached record levels. More than 60% of BTC remains unspent for at most one year. Zhu Su, co-founder of 3AC, stated that many people who bought BTC in 2017 or 2018 are still hodling. He added that “Anecdotally many ppl are remaining humble this time and purchasing every month regardless what else is happening.”