False hopes and real worries never end in the crypto universe. After some very short-lived gains, bitcoin (BTC) appears to be falling further. The temptation is great to quickly resell your possessions. Other investors, for their part, prefer to hang on, taking short-term losses and betting on long-term gains. In order to better understand the news, we give you all the details.
- The Unstable Cycles of Bitcoin (BTC)
- A sale at a loss for hodlers of bitcoins (BTC) in the long run?
- Celsius, Three Arrows Capital… contagious fear of insolvency?
The Unstable Cycles of Bitcoin (BTC)
Currently, bitcoin seems to be following quite unstable cycles. we talk about ” halving cycles According to analysts at bitcoin firm NYDIG, it would be a market trough soon, ie a decrease of at least 47%. Many experts agree that bitcoin was designed precisely to be a “ halving “. This refers to the 50% cut in the reward paid to the mining one block every 210,000 blocks, or about every four years.
While there have been only three such events in bitcoin (BTC) history, all of them occurred in the middle of its famous cyclical highs. At the same time, the peaks and troughs of the bitcoin price cycle had their meaning. They tended to appear about a third or even two thirds of the previous cycles. This was with the exception of the first cycle in which no reliable price data was available. If the current trend tends to hold, it could mean we have about six months left before we hit the real bottom of the market.
A sale at a loss for holders long term bitcoins
Recent cryptocurrency sales have shown that the number of long-term bitcoin holders selling at a loss was the highest since March 2019. At the time, bitcoin was trading around $4,000.
It is useful here to look at the long-term production profit ratio. This ratio measures the ratio of output spent to profit at a key point in time. Then this indicator allows to get an overview of the market sentiment. Also, it is helpful to get an idea of both profitability and losses incurred over a period of time. Thanks to this it is also possible to degree of profit performed for each unit moved on the chain. On the one hand, values below 1 indicate that long-term investors are selling at a loss. On the other hand, values greater than 1 show the opposite, which is a sale at a profit.
To better understand this phenomenon, let’s look at what the “average” bitcoin holder experiences. For the first time since March 2020, the latter is estimated to have a loss† Net unrealized gain and loss refers to the total amount of gain or loss in each unit. They are about -0.02. And this value, which is less than 0, clearly indicates that investors are losing money. This only adds fuel to the fire for Bitcoin investors, especially causing problems over the safekeeping or hasty resale of its assets.
Celsius, Three Arrows Capital… contagious fear of insolvency?
Cryptocurrency lending platforms, or hedge funds, are now fully part of the crypto landscape. In addition, their behavior can serve as reliable indicators of the reality of the market or its long-term potential. Among these platforms, Celsius is particularly well known. Very recently, Celsius made headlines by suspending all withdrawals, exchanges and transfers between accounts. According to a report by the Wall Street Journal, the company also hired lawyers specializing in restructuring to seek advice on growing financial problems.
More rumors are circulating, this time about the hedge fund Three arrows capital† About a week ago, founder Zhu Su posted a particularly vague tweet. In particular, he wrote that “We are in talks with the parties involved. We are fully committed to resolving this issue. The hedge fund would devise a strategy to successfully repay lenders after being liquidated by major lenders in the crypto universe.
From there and given the prominence of these two entities, it is inevitable that the fear will become contagious. And if it hits bitcoin (BTC), the shock will be violent. More and more crypto market participants are concerned about these significant risks. It seems difficult to find a company without some short-term risk. And especially the risk of long-term bankruptcy.
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Founded by Marc-Antoine CAEN POLETTI in 2021, Alt Write SEO is a content writing agency specializing in cryptocurrency, blockchain, and NFTs. It finds its roots in 2016 with the French Cryptocurrency Club, of which Marc-Antoine is the current president. Our mission is to support French-speaking crypto companies to make France the first cryptonation in the world.