Bitcoin’s biggest challenge right now is investor psychology, as many buyers are staying on the sidelines. The reason is that a huge portion of holders are currently losing money. More specifically, data from Glassnode shows that about 9 million Bitcoins, roughly 45% of the total supply, are worth less than what investors paid for them. And at recent lows near $62,800, nearly half of all coins were underwater. As a result, many investors are reluctant to commit more capital while sitting on losses.
Interestingly, the way the decline has occurred may be the reason why investor psychology is so low. Instead of a sharp crash followed by a quick rebound, Bitcoin has fallen gradually from its peak above $126,000 by slipping through key levels one after another. This slow decline has created a steady stream of losses, which discourages buyers from stepping back in. Indicators show that most trading days recently have involved investors selling at a loss, either because they need cash or no longer expect a quick recovery.
Therefore, each loss-making sale removes a potential future buyer and adds to selling pressure whenever prices bounce, making rallies weaker and shorter-lived. Meanwhile, several catalysts that previously pushed Bitcoin higher are now working in reverse. For instance, money is flowing out of spot Bitcoin ETFs, large holders known as “whales” are selling significant amounts, and leveraged bets have been wiped out.
Is Bitcoin a Good Buy?
Using TipRanks’ technical analysis tool, the indicators seem to point to a negative outlook for Bitcoin. Indeed, the summary section pictured below shows that two indicators are Bullish, compared to five Neutral and 15 Bearish indicators.
