Blockchain analysis provider Glassnode has described a bearish scenario for Bitcoin (BTC) where on-chain settlements indicate an impending increase in selling pressure.
In its weekly analytics report on Monday, Glassnode said that Bitcoin bulls “are facing a number of headwinds,” citing the network’s growing bearish data.
Researchers cited general weakness in traditional markets along with broader geopolitical concerns as the reason for the current attitude toward cryptocurrencies:
“The weakness in both bitcoin and traditional markets reflects the ongoing risks and uncertainty associated with the Federal Reserve’s expected March rate hike, fears of conflict in Ukraine, and growing civil unrest in Canada and elsewhere.”
He added that as the downtrend deepens, “we can expect the possibility of a more sustainable bear market to increase.” Bitcoin is currently trading 47% lower than its November record and has been down over the past 15 weeks.
The lack of on-chain activity is one of the clear signs of a Bitcoin bear market. The number of active titles or units is currently at the lower end of a bear market channel, indicating activity on the chain during periods of sideways or down markets, indicating lower demand and interest.
Active links in the chain. Source: glassnode
Glassnode reports that about 219,000 addresses have been offloaded in the past month, indicating that this may be the beginning of a period of user bloating from the network.
He calculated the owner’s short-term price based on the cumulative value of $47,200, which means that the average loss at current prices is about 22% for those who still have the asset.
“The longer investors stay underwater in their positions and the longer they experience unrealized losses, the more likely they are to hold used and sold coins.”
Several other measurements of the chain’s long and short positions were taken, culminating in the conclusion that there are currently 4.7 million BTC underwater in total. He added that more than half of those, or 54.5%, have it in short-term (less than 155 days) holders “and are statistically more likely to use it.”
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Crypto Twitter has also been inundated with bearish sentiment in recent days, with the Crypto Fear and Greed Index currently hovering at 20 – ‘Extreme Fear’.
At the time of writing, bitcoin prices are down 6% in the past 24 hours to trade at $36,738, according to CoinGecko. Bitcoin is now very close to its 2022 low, which was just over $35,000 on January 23.
On the positive side, Cointelegraph reported Saturday that the idle supply of bitcoin is nearing record levels, with more than 60% of bitcoin remaining unused for at least a year. Zhu Su, co-founder of Three Arrows Capital, commented that many people who bought BTC in 2017 and 2018 are still not raising their heads, adding: What else is going on.”
