Bitcoin slipped below $32,000 on Monday and is dangerously close to breaking the $32.5k level amid a major sell-off across cryptocurrencies and stocks.
With the value of BTC/USD down more than 7% in the past 24 hours, bulls are staring at price levels seen in July 2021, with on-chain data suggesting more pain.
BTC price slip sends 10% of supply into the unprofitability zone
As crypto sells off alongside stocks, more BTC has fallen into a loss. According to on-chain analysis platform Glassnode, the volatile dip to prices below $33k has thrown an additional 10% of Bitcoin supply into the red.
Last week Glassnode highlighted how a slump to lows of $33k would push more people, especially short-term investors into unprofitability.
Bitcoin was by then around $38k, but the dips seen over the last few days seem to have spooked a large pool of the short-term holder group, even as stocks sold off to see the broader risk-on market staring at more pain.
“Bitcoin bulls remain under pressure this week, as prices fall back to $33.8k, and network profitability falls by ~10%. Weakness has appeared across ETF product flows, stablecoin supply contraction, and in investor urgency to deposit coins to exchanges, largely in response to downside volatility,” the firm wrote in its weekly newsletter.
More pain is likely
Bitcoin is now over 53% off its November all-time-high above $69k.According to Glassnode, there could yet be more pain if the current drawdown is compared to previous bear markets.
First, the slump seen in July 2021 sent BTC to a price level that was 54.2% off its ATH. The bear markets that occurred in 2015, 2018 and March 2020 were even more painful, with capitulation sending Bitcoin -77.2% and -85.5% from its all-time highs then.
Network profitability has dropped to around 60% with the latest slump in BTC price pushing the flagship cryptocurrency to a ‘pain threshold’ similar to previous bear markets. The profitability levels are also similar to those recorded in the 2018 and 2019-20 bear markets.
“However it should be noted that both instances were prior to the final capitulation flush out event,” the firm’s analysts added in the report.
Crypto trader and analyst HornHairs believes a bottom is not in yet and that more pain is likely.
“Looking at the average time from cycle highs to cycle lows, as well as the average time cycle lows occur before the next halving, September-November of this year would be the most historically similar to previous cycles, in terms of time span, for a bottom to form.”
Chart showing historical price movement for BTC. Source: HornHairs on Twitter.
According to Michael van de Poppe, a full-time trader and top crypto analyst, investors might want to watch the current price levels for BTC. In his view, the area could provide for a “bounce play.”
#Bitcoin at this level should be interesting to keep an eye on.
Didn’t bounce towards $37.5K, but has been taking all the liquidity beneath the lows of 2022 and that should be a bounce play. pic.twitter.com/GMsToZTZMN
— Michaël van de Poppe (@CryptoMichNL) May 9, 2022
Bitcoin was trading around $31,580 on Monday afternoon, nearly 7.5% down in the past 24 hours.