The recent sharp fluctuations in Bitcoin prices have attracted great attention from the market. According to the latest report from Glassnode, an on-chain data analysis agency, investors who bought Bitcoin at a historical high of nearly $109,000 at the beginning of the year are accelerating their selling, resulting in a “moderate capitulation event” in the market. The current price of Bitcoin is hovering around $81,000, down 5.9% from seven days ago. There is a significant inversion between the average holding cost of short-term holders and the market price, which may pose a hidden danger to subsequent price trends.
Glassnode pointed out in its market report on March 11 that as Bitcoin prices fell from their historical highs, panic selling by short-term holders (holding periods of less than 155 days) became the main source of selling pressure. Data shows that the average purchase cost of these investors has soared from US$62,000 in October last year to US$91,300 at present, which means that at the current price of US$81,000, their unrealized losses have reached 10.6%. Analysts believe that when the price of Bitcoin continues to fall below the short-term holding cost line, it may trigger a wider stop-loss selling wave.
It is worth noting that Glassnode warned that there is a risk that the price of Bitcoin will fall to $70,000. The agency calculated through on-chain data models and found that a large number of “deep water” positions are concentrated in the current range of US$71,300 to US$91,900. If selling pressure continues to accumulate, the price of Bitcoin may find support at the lower edge of this range. However, the report also emphasized that there is a high probability that a temporary bottom will be formed around US$70,000, especially against the backdrop of expectations for a policy shift by the Federal Reserve.
Market dynamics confirm this judgment. 10x Research pointed out in a research report on March 10 that when the price of Bitcoin fell below the $80,000 mark, nearly 70% of the sell-off came from investors who entered the market in the past three months. This “textbook correction” echoes the market trend in August 2023, when Bitcoin prices fell 28% from $68,000 to $49,000, dragged down by recession concerns. However, historical experience shows that Bitcoin prices can often bottom out near key support levels, and the 7.5% rebound in the past 24 hours may be a reflection of this resilience.
Although BitMEX co-founder Arthur Hayes predicts that the price of Bitcoin may continue to fall to $75,000, most analysts believe that the current adjustment is a healthy correction. It is worth noting that Bitcoin price fluctuations are closely linked to the macro environment. After the U.S. market stabilized on March 11, the crypto market sentiment has shown signs of easing. With the continued entry of institutional investors and the improvement of spot ETF fund flows, the support strength of Bitcoin price above $70,000 may stand the test, accumulating momentum for the next round of increases.
