Bitcoin Plummets Below $60K, Yet Majority of Investors Remain Profitable


In a seismic shift that sent tremors through the virtual financial space, Bitcoin, the original digital currency, experienced a plummeting descent below $60,000 over the past weekend. This abrupt downswing, primarily propelled by frenzied sell-offs from major holders such as the US and German governments, stands as one of the most precipitous recessions in the cryptocurrency’s notably volatile history over the past two years. It is estimated that the market value experienced a contraction of billions of dollars owing to this price drop.

Yet, not all stakeholders are perturbed by the fall. Despite the dramatic fluctuations, Bitcoin owners continue to relish significant profits. In fact, data reveals that an unequivocal majority, approximately 83% of cryptocurrency investors, continue to be in the black, even considering the most recent market crash.

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Distributional data further unravels the narrative. According to the on-chain tracker, IntoTheBlock, the number of Bitcoin holders across the globe is estimated at 53.57 million. Given the current price level lingering closely above $56,000, the proportion of investors now incurring losses accounts for a mere 17% of this total.

This fraction further disaggregates into 13% of Bitcoin holders who acquired their assets when the price was soaring above the current value, a move that currently leaves their investments in red. Approximately 4% of holders are standing on the threshold of uncertainty with their coins purchased at a value akin to the present one, and thus they neither make a profit nor suffer a loss at this price level.

Crunching the numbers, nearly 44.61 million Bitcoin investors are tiding over the storm with continued profits on their holdings, while a lesser 6.8 million bear the brunt of the recent losses. A smaller section of about 2.16 million investors finds themselves at the breakeven point, neither losing nor gaining amid the volatility.

Of these, a significant cluster of profit-making investors (those still in green), interestingly entered the Bitcoin market with prices below $50,000. This implies that even if the prices were to ebb by another 10% from the current level, the lion’s share of Bitcoin investors would be cushioned, holding on to their profits.

However, where there’s light, there’s also shadow. Despite an overwhelmingly positive picture for many Bitcoin investors, a certain trend casts a pall over the long-term Bitcoin holders. Based on a report from Sentiment, the average returns for Bitcoin investors who are in it for the long run are teetering at the precipice of falling into the red zone for the first time in over a year.

Surprisingly, this trend isn’t necessarily disastrous for the Bitcoin price. Historical data suggests that Bitcoin often bounces back when average long-term holder returns dip into the negative. As implied by the Sentiment report, such fluctuations often create an opportune moment to buy, particularly when “Bitcoin’s 30-day and 365-day MVRV are in negative territory.” The tracker concludes on an optimistic note, pointing to a “mathematical validation that you are buying relative to other traders’ pain.”

Supporting this optimism with a concrete example, “if an investor had made a purchase the former time when both these indicators were in negative territory, the investor’s return on Bitcoin would have soared to +132%.” Therefore, these phases of situated in the red can serve as useful pointers for pinning down when to start buying, signifying the potential bottom of the downturn.

As Bitcoin continues to wobble amid a tug-of-war between the bulls and the bears, all in the world of cryptocurrency wait with bated breath for the possible resurgence of the pioneering digital currency.