Bitcoin Faces Selling Pressure: Realized Losses and US Sell-Off Insights

By: Eva Baxter

The current Bitcoin market has been facing increased pressures, with realized losses reaching levels not seen since the dramatic collapse of FTX in 2022. This scenario is primarily fueled by short-term investors selling off their Bitcoin holdings, driving prices further down. Blockchain data platform Glassnode has confirmed a significant spike in realized losses, similar to past major market downturns, indicating a widespread sell-off by recent buyers. As many investors are witnessing a depreciation in their portfolios akin to historical sell-offs, speculations arise about how low Bitcoin will fall from its April highs of around $83,000.

This downturn primarily reflects a significant liquidation of investments by US-based entities, according to on-chain analytics firm CryptoQuant. They highlighted a considerable selling activity from American investors as a main contributor to the ongoing price decline. The 'Coinbase Premium Gap'—the difference in Bitcoin's price between Coinbase and Binance—has recently dropped into negative figures, emphasizing a pronounced selling trend in the US. This phenomenon suggests that large US-based investors are opting to sell their Bitcoin more aggressively compared to global peers.

Further data from CryptoQuant reveals an increase in outflows from Bitcoin spot Exchange-Traded Funds (ETFs) during the sell-off, contrary to the trend seen in the last quarter of the previous year. Over 8,000 BTC has left these funds, contrasting with the substantial inflow of 194,000 BTC into these funds during the same period last year. The looming concern is whether Bitcoin can sustain its market strength above crucial thresholds, particularly around $86,566, where the cost basis for spot ETFs exists. Breaching this level might exacerbate the market downturn as ETF holdings risk moving underwater.

As Bitcoin trades around $92,000, a 10% decrease over the past week poses questions about the cryptocurrency's immediate future. This situation underscores the intertwined effects of market behavior driven predominantly by regional investor actions and significant financial indicators pointing to broader market sentiments.