Bitcoin’s overall market performance is currently better than historical bear markets, and investors remain solid.
Recently, the Federal Reserve's expectation of a rate cut has attracted global market attention. As the possibility of a rate cut increases, investors are paying more attention to the impact on the Bitcoin market. However, despite the short-term volatility in the Bitcoin market, the overall investor situation remains robust.
Author: Gyro Finance; UkuriaOC, CryptoVizArt, Glassnode. Ported by: Bosen Quantitative Consultant Xiao Sun (bosen0722)
Unrealized losses and stress for short-term holders
While long-term holders of the Bitcoin market are relatively healthy, short-term holders are suffering from higher unrealized losses. Data shows that short-term investors' losses are mainly concentrated in the price corrections in the past few months. Although these holders are under great pressure, the scale of their losses has not yet reached the level of previous bear market periods. Currently, the loss ratio of short-term holders is close to the market volatility period in 2019, which means that the market may still see further downside.
The overall financial situation of investors is relatively sound
From a macro perspective, the financial situation of Bitcoin investors as a whole remains sound. Unrealized losses account for only 2.9% of Bitcoin's market value, and the ratio of unrealized profits to losses is still as high as 6 times, which shows that most investors are still in a relatively favorable position. Compared with the sharp corrections in history, the price of Bitcoin has only fallen 22% from its historical high, which is much lower than the decline in the late stage of the usual bull market.
Market downturn and increased volatility
Despite the overall positive investor sentiment, downward pressure and volatility are increasing. Key indicators such as the sell-side risk ratio show that the market is saturated with profit and loss activity. This means that volatility may increase within the current price range. As the price of Bitcoin approaches the cost basis of many investors, the market may see sharp fluctuations in the coming months.
Macroeconomic impact: Fed rate cut expectations
Recently, the Federal Reserve's possible decision to cut interest rates has become the focus of the market. Historical data shows that interest rate cuts are generally positive for cryptocurrencies because they reduce the opportunity cost of holding Bitcoin for investors. However, BitMEX founder Arthur Hayes said that interest rate cuts may not immediately provide a significant boost to the crypto market in the short term, as some funds will flow to low-risk assets.
What should ordinary people do?
[No investment and financial advice, the cryptocurrency world is risky, so be careful when investing! ]
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