Glassnode protects: The causes of Bitcoin's fall and the risks for investors!

Glassnode protects: The causes of Bitcoin's fall and the risks for investors!

In recent weeks, Bitcoin has been on a downward trajectory, leading to billions of dollars being wiped off the market. Analyst platform Glassnode has now revealed the key reason for this decline and warned investors of further risks.

According to Glassnode's latest analysis, Bitcoin's price is facing constant pressure from short-term investors who bought BTC at its all-time peak, when the price reached $109,000. However, as soon as there was a minor drop, many began panic selling, which only deepened the decline.

Glassnode analysts warn that if the selling continues, Bitcoin could face further declines. They explain that there is a significant disconnect between the average purchase price of these short-term investors and the current market value of Bitcoin. In October, the average purchase price was $62,000, while it has now risen to $91,362. At the current price of USD 82 380, these investors face an unrealised loss of approximately 10.6%.

The effects of the market panic are also reflected in the SOPR (Sales of Profit and Realisation) indicator, which measures whether holders are selling their assets at a profit or a loss. According to Glassnode, this indicator of short-term investors has fallen below 1, indicating that they are trying to limit their losses, but their concerns remain.

"The drop in SOPR below 1 is a warning sign that short-term investors are trying to minimize losses, but if this trend continues, Bitcoin could fall to as low as $70,000," warn Glassnode experts.

Investors should therefore be cautious and closely monitor market developments to avoid further losses. The situation in the cryptocurrency space remains tense and risks remain.

*This is not an investment recommendation.

Coingarage team