Bitcoin
As Bitcoin Recovers to $66K, Short-Term Holders Sell for “Basically Zero Profit”
Although large investors appear to be showing their interest in Bitcoin, growth still needs to accelerate to make the recovery sustainable, say analysts at CryptoQuant.
The price of Bitcoin managed to recover to the $66,000 mark on Wednesday night following news of lower-than-expected inflation in the US, resulting in minimal or no profit for short-term holders who are selling.
In a recent research report, blockchain analytics firm CriptoQuant said short-term Bitcoin holders are selling “for basically zero profit,” adding, however, that growth “still needs to accelerate to make the recovery sustainable.”
“[…] traders are now suffering unrealized losses on their positions, a situation that in the past has coincided with a local bottom in prices.”
CriptoQuant
Additionally, the report notes that the Bitcoin balance at OTC counters has stabilized since late April, suggesting a decrease in the supply of Bitcoin entering the market through these channels. However, analysts warn that despite this stabilization, stablecoin liquidity growth, which is often associated with sustainable price rises, is “still slowing down” from a market liquidity perspective.
Tether’s USDT market value relative to Bitcoin price | Source: CryptoQuant
Analysts also pointed out that the price of Bitcoin remains relatively undervalued from a mining company profitability perspective.
“Bitcoin miners are currently extremely underpaid and their profitability has fallen to the lowest level since March 2020, just days after the COVID market crash.”
CriptoQuant
Meanwhile, analysts at blockchain firm Kaiko suggest that the recent Bitcoin halving could soon force miners to sell their crypto holdings if prices do not recover quickly. This is because average daily network fees, which increased after the halving, are now decreasing. Initially, these fees gave miners some relief, Kaiko says, noting that they are falling again as the initial excitement about the Runes protocol has “cooled off.”