40% of Bitcoin Investors Are Now Underwater – Can the Cryptocurrency Bounce Back?

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Bitcoin continued its downward trend, falling 55% in value from its all-time high of $69,044, which was reached in November 2021. The crypto hovered around $31,000 on the morning of May 10, falling 4.3% in the past 24 hours, according to CoinGecko. Now 40% of holders are now under water on their investments, CNBC reports.

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However, a Glassnode report notes that while this represents a significant drop, it remains modest compared to the ultimate lows of previous Bitcoin bear markets. Indeed, the bear markets of 2015, 2018 and March 2020 capitulated at lows between -77.2% and -85.5% from all-time highs.

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The Glassnode report added that in times of volatility and market stress, it is typical to see an influx of “urgent” trades as investors look to reduce, sell or re-collateralize their margin positions — and this week saw one. “Burst of 42.8k transactions,” the highest inflow in transaction activity since mid-October 2021, Glassnode added.

In addition, more than $3.15 billion in value went in or out of the exchanges during the sell-off this week, with a net bias for inflows, which accounted for $1.60 billion – the largest total exchange-related volume spike since the market was fully completed. time highs in October and November last year. It also equates to inflows/outflows at the peak of the 2017 bull market, Glassnode added.

This was echoed by CoinShares analysts, who said in their weekly report that digital asset investment products last week surprisingly saw inflows totaling $40 million in what they believe were investors benefiting from the substantial price weakness.

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“Bitcoin saw inflows totaling $45 million, the main digital asset where investors expressed a more positive sentiment,” CoinShares said.

However, amid the downtrend, bulls will remain bulls, as Binance CEO Changpeng Zhao (aka CZ), tweeted on May 9, “It may be the first time and painful for you, but it’s not the first time for you. Bitcoin. It just looks flat now. This too will look flat (now) in a few years.”

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About the author

Yael Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including: Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major New York City financial firms, including New York Life and MSCI. Yael is now a freelancer and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare”, with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in journalism from New York University and one in Russian studies from Université Toulouse-Jean Jaurès, France.

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