Key Points
- Bitcoin’s short-term holders are experiencing losses as the cryptocurrency has fallen below their cost basis.
- Heavy outflows from ETFs have contributed to Bitcoin’s recent decline, a trend that might persist.
Bitcoin’s Recent Performance
Bitcoin has recently dropped below the cost basis for its short-term holders (those who have held for less than 155 days). This has been primarily due to significant outflows from ETFs.
The Fear and Greed Index for Bitcoin showed a reading of 26, indicating fear among investors. This is a slight improvement from the previous day’s reading of 20, which suggested extreme fear. The sentiment follows a 13.8% drop in Bitcoin’s value over the past nine days.
Short-Term Holders and Market Sentiment
CryptoQuant analyst Axel Adler noted that these short-term holders are experiencing modest losses due to the recent price drop. On average, they’re at a 6.4% deficit from their cost basis, which is approximately $90.5k.
Adler suggested that this situation might lead to a period of market consolidation and accumulation. However, this would require steady demand and a shift in the overall fearful and uncertain macroeconomic sentiment.
The US spot ETF flows have seen heavy outflows over the past ten days, contributing to Bitcoin’s losses over the past week. Data reveals that while there were inflows worth $94.3 on February 28, they were overshadowed by the $1.14 billion outflow on February 25. The market sentiment remains bearish, and further losses may be on the horizon.
The MVRV ratio, defined as the market value divided by the realized value, focuses on holders who have held Bitcoin for less than 155 days. A drop below 1 MVRV indicates these holders are at a loss.
Bitcoin could potentially continue its downward trend in the coming weeks, possibly consolidating in the $65k-$70k region for a few months before recovery, similar to its behavior in the previous cycle post-halving.
