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While Bitcoin has been on a downward trend in recent weeks that has caused billions of dollars to be wiped out of the market, Glassnode has explained the real reason for the decline.
In its latest analysis, on-chain cryptocurrency analytics platform Glassnode argued that the Bitcoin price is under constant selling pressure from short-term investors.
He said that these investors bought BTC at its peak of $109,000, but started to panic sell after a small drop.
Stating that the decline in BTC and altcoins was deepened by the panic sales of short-term investors, Glassnode said that if the sales continue, there may be a further decline.
Glassnode also said that there is a large disconnect between the average purchase price of these investors and the current market value of Bitcoin. According to the data, the average purchase price of investors in October was $62,000, while that price has currently risen to $91,362. With Bitcoin trading at $81.9400, these investors are facing an unrealized loss of approximately 10.6%.
Specifically, Glassnode analysts added that selling pressure due to market panic caused short-term investors’ SOPR indicator (on-chain data that measures whether holders are selling their assets at a profit or loss) to drop below 1.
“A drop in SOPR below 1 is a sign that short-term investors are cutting their losses because they are unable to overcome their fears.
If the sell-off continues, Bitcoin could fall to $70,000.”
*This is not investment advice.
