As on-chain data reveals to traders adopting a threat approach with respect to cryptocurrencies and equities, the BTC price reaches a 2022 low.
“When it rains, it pours” is an old proverb that takes on new significance in the cryptocurrency markets on May 9, as traders face another day of agony as Bitcoin (BTC) reaches its lowest level since 2022.
Bitcoin reached a daily low of $31,000 on May 9 as bulls scrambled to mount a weak defense, according to data from Cointelegraph Markets Pro and TradingView.
Another possible disadvantage exists.
In recent months, Bitcoin bulls have been unable to establish a strong support floor because bears have been unrelenting in their attempts to pull the price down.
BTC is currently down 50 percent from its all-time high in November, but on-chain analytical firm Glassnode said in a recent report that this decline “remains modest when compared to the ultimate lows of prior Bitcoin bear markets.”
As stated by Glassnode, “It should be noted that both instances were prior to the final capitulation flush out event. As such, further downside remains a risk, and would be within the realm of historical cycle performance.”
A deeper examination of the on-chain data indicates that investors’ abandonment of Bitcoin has escalated in recent weeks as the price has continued to decline.
The Bitcoin exchange fee dominance, which measures what percentage of Bitcoin network fees were paid to deposit BTC to an exchange, is proof of this capitulation.
According to Glassnode, the sudden surge in Bitcoin exchange fee dominance to 15.2 percent is the second greatest in history and “further supports the case that Bitcoin investors were seeking to de-risk, sell and/or add collateral to margin in response to market volatility.”
Since the market selloff in March 2020, stablecoin supply has surged from $5.33 billion to $158.25 billion, providing more evidence of a spike in risk-aversion.
After reaching a high of $161.53 billion at the beginning of April, the aggregate supply of stablecoins has decreased by $3.285 billion due to a rise in USD Coin (USDC) redemptions that outpaced stablecoin token inflows.
As Glassnode stated, “Overall, there are a number of signals of net weakness in the space, many of which indicate that risk-off sentiment remains the core market position at this time.”
Possibility of keeping in excess of $30,000
The recent market fall has forced many crypto traders to become pessimistic and welcome the possibility of a drop below $28,000, which has caught the interest of contrarian specialists, such as futures trader Peter Brandt, who tweeted the following in response to the change in sentiment.
It remains to be seen what the future holds for Bitcoin, but it is prudent to prepare for further volatility as global events continue to put pressure on financial markets.
Glassnode said, “Bitcoin remains highly correlated to the broader economic conditions, which suggests the road ahead may unfortunately be a rocky one, at least for the time being.”
The overall value of the cryptocurrency market is presently $1,466.7 billion, with Bitcoin accounting for 41.7%.
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