There’s a crypto refrain when prices crash precipitously like this: The selloff is washing out the short term-focused non-believers, known as weak hands, strengthening the industry in its wake. It’s a glib way to think of all those who had joined the market as Bitcoin price rose to an all-time high at the end of last year -- including institutions and small-time at-home investors, many of whom are deeply underwater on their investments now.
A measure called MVRV -- which divides market value by the average purchase price -- shows that short-term holders, on average, purchased Bitcoin at around $47,500. Another gauge, called the spent-output-profit ratio (SOPR), indicates those kind of investors are selling at a loss right now, according to an analysis by Genesis Global that uses Glassnode data.
And it’s not just those who have held the coin for a few months. More than half of traders who held crypto at the end of 2021 had gotten in that year, crypto-firm Grayscale Investments said at the time. Bitcoin average price in 2021 hovered around $47,300. It was near $32,000 on Monday in New York trading.
“Absolutely a ton of people are down,” said Stephane Ouellette, chief executive of FRNT Financial Inc. “Anyone who bought BTC for the first time in 2021 is down.”
Crypto fans have long argued that digital assets would hold up well during turbulent times. Many had said Bitcoin would prove to be a good inflation hedge thanks to its limited supply. It was also supposed to hold up better amid economic and geopolitical crises because it’s not tied to any government and has no centralized authority.
Instead, digital-asset investors are suffering through an environment that’s put a lot of risky assets through the wringer this year. The
Read more on tech.hindustantimes.com