The long-term profitability of Bitcoin (BTC) has declined to levels last seen during the previous bear market in December 2018. According to data shared by crypto analytics firm Glassnode, BTC holders are selling their tokens at an average loss of 42%.
Data from Glassnode indicates that long-term holders of the major cryptocurrency selling their tokens have a cost base of $32,000, meaning that the average purchase price of these holders selling their stack is above the $30,000.
The current market decline, coupled with declining profitability, can be attributed to several macroeconomic factors. The BTC market continues to have a strong correlation with the stock market, especially tech stocks, which are currently seeing an even bigger downtrend than cryptocurrencies.
Rising inflation, coupled with the inability of central banks to control it, has also added to the pain of BTC investors. With much less to invest on their hands, traders and long-term holders are turning to short-term returns and less risky assets.
This was evident in the sales of BTC miners, who have historically been long-term holders in anticipation of further profit.. However, rising energy costs, coupled with the increasing difficulty of mining, have reduced profit margins for these miners, forcing them to settle for short-term profits.
Bitcoin miners’ balance sheet has seen large outflows since prices were rejected from the local high of $24.5k, suggesting aggregate miner profitability is still under a degree of stress. While miner output has ranged from 3,000-8,000 BTC, however, market data indicates that a price drop to $18,000 could lead to a monthly output of 8,000 BTC.
Bitcoin, the largest cryptocurrency, is currently trading in the $19,000 to $20,000 range, struggling to conquer the $20,000 resistance despite multiple breakouts above it in the month of September.
The profitability of long-term holders, added to the profitability of miners, has reached a multi-year low. Nevertheless, the levels are quite similar to when the cryptocurrency market bottomed during previous cycles.
Bitcoin is currently trading in the $19,000-$20,000 range, struggling to conquer the $20,000 resistance despite multiple breaks above it in the month of September. The top cryptocurrency is trading at a 70% discount to its market high of $68,789 posted in November of last year.
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