40% of Bitcoin Investors are Underwater

May 10, 2022

Cryptocurrencies have not been spared from the recent market turbulence, with bitcoin plummeting nearly 55% from its peak, leaving 40% of traders underwater, according to data from Glassnode.

The percentage is even higher for short-term holders who entered the market in the last six months, when the price of bitcoin was around $69,000. A separate analysis from Genesis Global, based on Glassnode’s data, shows that, on average, short-term holders purchased bitcoin for $47,500. As of Monday, the price of bitcoin had fallen to around $32,000.

In the last month alone, 15.5% of all bitcoin wallets fell into an unrealized loss.

Analysts from Glassnode noted a rush of “urgent transactions” amid the latest downturn, meaning that investors are willing to pay higher transaction fees to expedite their orders. During last week’s sell-off, more than $3.15 billion in value moved into or out of crypto exchanges, the largest amount since the market hit its all-time high last November.

The recent downturn also challenges the claims of many crypto evangelists that digital assets would perform well during turbulent times. Many have argued that is limited supply would make it a good hedge against inflation, and that it would hold up well during economic and geopolitical crises because it is not tied to any government or central authority.

Instead, bitcoin has followed the path of most risky assets this year. In fact, bitcoin has largely moved in tandem with the Nasdaq 100. Data from Bloomberg shows that the 90-day correlation coefficient of Bitcoin and the Nasdaq 100 is at 0.68, the highest on records that go back to 2010. A correlation coefficient of 1 would mean they are in perfect lockstep, while -1 would mean they are moving in the opposite direction.


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