Bitcoin (BTC) long-term returns have fallen to levels recently seen during the previous bear market in December 2018. According to data provided by the cryptoanalytical firm, BTC holders are selling their coins at an average loss of 42%.
Long-term Bitcoin holders. Source: glassnode
Glassnode data shows that long-term cryptocurrency holders selling tokens have a base value of $32,000, meaning the average purchase price for those holders selling their stack is over $30,000.
The current market downturn, exacerbated by declining margins, can be attributed to several macroeconomic factors. The BTC market remains closely linked to the stock market, especially technology stocks, which are currently experiencing a stronger downward trend than cryptocurrencies.
Rising inflation has exacerbated central banks’ inability to control it, while exacerbating the pain for BTC investors. With so few investments in hand, traders and long-term owners turn to short-term profitability and less risky assets.
This was also evident from the selling of BTC miners, historically BTC miners have been long term carriers in anticipation of higher profits. However, rising energy costs, combined with increasing mining difficulties, have reduced the profit margins of these miners, forcing them to settle for short-term profits.
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Bitcoin miners’ balance sheets saw significant outflows as prices rejected from a local high of $24.5K, indicating that the overall profitability of Bitcoin miners remains under some pressure. While the inflow of miners ranges from 3,000 to 8,000 bitcoins, market data shows that a price drop to $18,000 could result in a monthly outflow of 8,000 bitcoins.
Bitcoin, the top cryptocurrency, is currently trading in a $19,000 to $20,000 range, struggling to clear the $20,000 resistance despite several breaks above this level in September.
Bitcoin miner net position change Source: Glassnode
Long-term return on ownership, added to mining returns, reached its lowest level in many years. However, the levels are very similar to the levels when the cryptocurrency market bottomed during previous cycles.
Bitcoin is currently trading in a $19,000 to $20,000 range, struggling to clear the $20,000 resistance despite several breaks above it in September. The top cryptocurrency is currently trading at a 70 percent discount from its high market cap of $68,789 posted last November.