On-chain analytics firm Glassnode has concluded that Bitcoin (CRYPTO: BTC) currently has “numerous bearish headwinds in play.”
What Happened: In the most recent edition of its weekly on-chain report, Glassnode said the probability of a more sustained bear market can be expected to increase given the fact that recency bias and the magnitude of investor losses weigh on sentiment.
“One of the distinct signals of bearish Bitcoin markets is a lack of on-chain activity,” stated the Glassnode analysts.
“This week however the degree of on-chain activity is languishing at the lower bound of the bear market channel, which can hardly be interpreted as a signal of increased interest and demand for the asset.”
The report went on to note the number of non-zero balance addresses created over the last 30-days had also decreased. The analysts interpreted this as a sign that some investors had been emptying their address balances completely.
“Over the last month, around 219k addresses (0.54% of the total) have been emptied, which is a metric to watch in case this is the start of a period of net outflows of users from the network (as was seen in May 2021),” read the report.
As of Feb. 21, short-term Bitcoin holders had an average unrealized loss of -19.3%. The total magnitude of coin supply held at a loss was also found to be higher than it was during the crypto selloff in May 2021.
According to Glassnode, a total of 47 million Bitcoin is currently underwater and 54.5% of it was held by short-term holders who are likely to sell.
“It looks like a bear market. But do keep in mind, that longer-term, the bear authors the bull that follows,” concluded the analysts.
BTC Price Action: As of Tuesday at publication, Bitcoin was trading at $37,696.23, down 2.84% in the last 24 hours. Major altcoins such as Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and Avalanche (CRYPTO: AVAX) were down 4.06%, 4.95% and 5.53%, respectively.
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