These Signals Put Bitcoin on a Bearish Path According to Glassnode

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The past few weeks have not been kind to the cryptocurrency industry and the financial markets. In line with the fear of a growing conflict in Ukraine, the civil unrest in Canada, and the Fed’s decision to raise interest rates, the prices of most assets significantly declined. Bitcoin, for one, dropped to $36,000, which is its lowest price since February 3rd.

Keeping in mind those events, many envisioned the start of another cryptocurrency bear market. In its recent report, the blockchain data provider Glassnode pointed out some of the bearish signals indicating that bitcoin’s price might continue tumbling.

What Are the Signals?

The analytics company noted that bitcoin’s on-chain activity failed to make any progress last week, which is the first sign of decreasing interest and demand for the asset.

This receives support from the non-zero balance BTC addresses, which typically display retail investors’ behavior. Glassnode informed that over the last 30 days, around 220,000 such wallets had been emptied completely. In comparison, when the primary cryptocurrency traded at about $60,000 in November, non-zero addresses reached an all-time high of nearly 39 million.

The percentage of entities in profit is also on the decline, which is somewhat expected as the asset’s price is way below its peak. According to Glassnode’s estimations, 10.9% of BTC investors accumulated more coins at prices between $33,500 and $44,600.

As most of them entered the market in the past several weeks, Glassnode determined that they might be the first to sell their portions should BTC’s price continue tumbling.

Glassnode Chart, Source: Glassnode

STH Vs. LTH Behavior

The chain metrics provider touched upon long-term holders (holding their assets for more than 155 days) and short-term ones (less than 155 days). It is estimated that most STHs have an average on-chain cost basis of $47.2k, which at the time of writing (BTC price $38K) is an average unrealized loss of around 20%.

As such, the report outlined that the percentage of entities in profit ranges between 65.78% and 76.7%.

Somewhat unsurprisingly, Glassnode concluded that short-term holders don’t possess the so-called “diamond hands” and tend to dispose of their positions as soon as BTC’s volatile nature strikes. The firm indicated that such investors have already started or most likely will begin selling bitcoins if the asset fails to reverse its recent downtrend.

In contrast, long-term holders, which have entered the market ahead of the run-up towards $69,000 in November, tend to stay calmer without excessive selling.

However, Glassnode determined that more than half (54.5%) of the total BTC underwater (4.7 million coins) is held by STHs. This could be another worrying sign for the asset’s short-term price movements, as these investors are “statistically more likely to spend” their holdings.

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