False hopes and real worries never end in the crypto universe. After several very short-lived rises, bitcoin (BTC) seems to be continuing to fall. There is a great temptation to resell one’s assets in haste. Other investors, for their part, prefer to hold on, take the short-term losses and bet on the long-term profit. In order to better understand its 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 term?
- Celsius, Trois Flèches Capitale… a contagious fear of insolvency?
The unstable cycles of bitcoin (BTC)
Currently, bitcoin seems to follow quite unstable cycles. We are talking about ” halving cycles “. According to analysts at bitcoin firm NYDIG, it could reach a market trough soon, i.e. a drop of at least 47%. Many experts agree that bitcoin is precisely designed to undergo a “ halving “. This refers to the 50% reduction in the reward paid to the mining one block every 210,000 blocks, or approximately every four years.
Although there have only been three such events in the history of bitcoin (BTC), they all occurred in the midst of the latter’s famous cyclical highs. At the same time, the peaks and troughs of the bitcoin price cycle had their significance. They tended to appear about a third or even two-thirds of the way from previous cycles. This with the exception of the first cycle during which reliable price data was not available. If the current trend tends to persist, it may mean that we still have about six months before we reach the true 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 that time, bitcoin was trading at around $4,000.
It is useful here to look at the profit ratio of long-term production. This ratio measures the ratio of outputs spent and profit at a key moment. Then, this indicator allows to have an overview of the market sentiment. It is also useful to get an idea of the profitability as well as the losses incurred over a given period. Thanks to it, it is also possible to appreciate the degree of profit performed for each unit moved on the chain. On the one hand, values below 1 indicate that longer-term investors are selling at a loss. On the other hand, values greater than 1 are exempt from the opposite, namely a profit sale.
To better understand this phenomenon, we can look at what the “average” bitcoin holder experiences. For the first time since March 2020, it is estimated that the latter is undergoing a loss. Net unrealized profit and loss refers to the total amount of profit or loss in each unit. They amount to about -0.02. And this value, being less than 0, clearly indicates that investors are at a loss. This only adds fuel to the fire for Bitcoin investors, and above all stirs up trouble over the custody or dragged sale of its assets.
Celsius, Trois Flèches Capitale… a contagious fear of insolvency?
Cryptocurrency lending platforms, or even hedge funds, are now 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 published by the Wall Street Journal, the company would also have hired lawyers specializing in restructuring, in order to obtain advice on its growing financial problems.
More rumors swell, this time about the hedge fund Capital of the Three Arrows. About a week ago, its founder Zhu Su posted a particularly vague tweet. In particular, he wrote that “We are in the process of communicating with the parties concerned. We are determined to solve this problem. “. The hedge fund is said to be devising a strategy to successfully repay lenders after it was liquidated by major lenders in the crypto universe.
From there and given the notoriety of these two entities, it is inevitable that fear becomes contagious. And if it touches 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 devoid of any short-term risk. And above all the risk of long-term insolvency.
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