40per of Bitcoin ($BTC) Investors Are Now Sitting on Unrealized Losses
Categories: Bitcoin US
The price of Bitcoin ($BTC) recently plunged to $31,000 after a series of withdrawals on the Anchor Protocol sled to the largest decentralized stablecoin, UST, losing its peg. Bitcoin’s crash has seen 40% of investors in the cryptocurrency sit on unrealized losses.In response to the UST crisis, the Luna Foundation Guard deployed over 28,200 BTC to defend the UST’s peg. The added liquidity on exchanges and led to a recovery in UST’s price, which surged from its $0.61 low to $0.94 before falling again. The added liquidity may have added selling pressure to BTC. According to on-chain analytics firm Glassnode, network profitability defined as a “drop in the percentage of addresses, entities and/or supply in profit,” when BTC was trading at around $33,800 between 60% and 62% of BTC investors were in a state of profit, meaning around 40% were sitting on unrealized losses.CNBC reports that in the last month alone, 15.5% of all BTC wallets fell into an unrealized loss at a time in which the flagship cryptocurrency’s correlation to equities has been rising. That rising correlation has seen analysts at Bank of America challenge BTC’s role as an inflation hedge and instead suggest it trades as a risk asset. The firm’s report also notes that 15.2% of on-chain transaction fees were “associated with exchange deposit transactions,” a figure higher than the one seen during the height of the 2017 bull-run and the May 2021 sell-off.It adds that over $3.15 billion worth of the flagship cryptocurrency moved into or out of exchanges, the largest amount since the market hit an all-time high near $69,000 in November 2021.As reported, Bank of America’s analysts expect the correlation between BTC and equities to remain in the near future. Moreover, while bitcoin has often been compared to gold, the correlation between the flagship cryptocurrency and the precious metal has dropped to near zero since June 2021, and has kept trending down.