The Bitcoin sector is currently experiencing the largest wipe-out since March 2020. With the token losing nearly 50% of its value in recent weeks, retail traders have been rushing to sell off their holdings in case of a further crash.
The recent market crash is blamed on various remarks made by major crypto players and regulatory moves in China. The sell-off has raised questions about whether the 2021 bull market is still in play. Glassnode, an on-chain analytics platform, has issued metrics for the past week that show the severity of the market correction so far. However, the data also shows a significant percentage of Bitcoin holders who are still in the profit zone.
Profitable entities by Glassnode
According to the metrics, the number of unique entities that are still profitable now stands at 76%. However, this does not mean that the Bitcoin market is still in a bullish zone. The metrics also show a proportion of market holders who bought coins at a higher value and these holders may dispose of their tokens by panicking in response to market movements.
Glassnode groups current holders most likely to sell into three groups. The first group is coin holders sitting on losses after buying when the market was at its peak. The second category is coin holders in profit who believe the market is still performing well and miners who may sell their holdings to recover costs caused by Chinese regulations. The data also shows that the largest proportion of holders were short-termers who had bought coins within the last six months.
Impact of Chinese Mining Restrictions
Miners have not been spared from the recent effects of the market crash. The restrictions on the the mining industry in China have pressured miners to sell their tokens in the short term. The panic sales are expected to cause another crash, and this may not sit well with short-term holders who will also sell, forcing the market into even deeper bearish turmoil.
However, at the moment, the number of coins mined and held is still large compared to the number of coins mined and sold. It remains to be seen the full extent to which miners will start selling their tokens as China rolls out the proposed changes.
The mining restrictions in China have been devastating to the crypto ecosystem. The region is on the verge of losing its crypto dominance, given that China accounts for 70% of the global mining activities.
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