Bitcoin Profitability Dives to Record Low in Two Years! Will Investors Finally Give Up?
The crypto market has been struggling for a while now and has taken the likes of Bitcoin down with it.
The crypto market has been struggling for a while now and has taken the likes of Bitcoin down with it. The result of this extended trend of low prices has led to a heartbreaking phenomenon for the BTC fanatics. Bitcoin profitability has dropped across both major and minor digital assets in the space. Bitcoin, the pioneer cryptocurrency has been especially hard hit as its profitability has now declined to two-year lows. Even with the recent price recovery, the profitability of Bitcoin has been at the worst levels since 2020. What happened has been both a mixture of declining prices over a number of months and the newer investors who got in at higher prices are being left with bags of losses. As a result, the profitability has now touched levels that it has not seen since May 2020.
There are currently only about 54% of all Bitcoin investors who remain in profit. Now, this still means the majority of holders are still in profit but compared to where this percentage was in the last few months, it is obvious that the decline has been large. In total, there are only 24.77 million Bitcoin addresses that are counting a profit. Another 20.04 million addresses are currently in the red zone, amounting to 44% of all Bitcoin holders now in the lost territory. This puts only 2.49% of BTC holders in the neutral zone, so only 1.14 million addresses are holding BTC that were bought at prices equivalent to the present market value.
Even with the Bitcoin profitability at two-year lows, it has not stopped whale activity on the network. The number of large transaction activity had grown significantly in the last two days, rising more than 40% from Sunday to be sitting at 19.62k large transactions that have been carried out in the last 24 hours. What this suggests is that whale activity is ramping up in the market once more. After the lull of the weekend, their recent activity has followed the price recovery and as Bitcoin settles above US$31,000, this activity is expected to continue to grow.
In terms of profitability, the market continues to favor long-term holders. Data shows that holder composition is made up of 61% of those who have held for more than a year. Now, given the growth of the market in 2021, it is safe to assume that those who bought coins towards the end of the year are currently at loss. However, those who have held before the bull rallies began, remain firmly in profit and will continue to do so even if Bitcoin were to decline another 50% from here.
Inventor of Cardano and Input-Output Global (IOG) CEO, Charles Hoskinson, gave his opinion on the recent events related to the crash in the Terra Classic network, formally known as Terra. A collapse in the price of its native token LUNA caused the algorithmic stablecoin UST to deppeged from the U.S. dollar. The consequences have been catastrophic and continue to ripple across the crypto space. In a recent interview with CoinDesk, Hoskinson claimed the event highlighted the importance of taking time to develop a project before releasing it to users. Otherwise, as the LUNA/UST crash seems to demonstrate, there is a higher risk for a product to become unsustainable. Hoskinson said the following on these events and the billions of dollars lost to hacks and other cyberattacks which have impacted crypto users since 2021.
Cardano could be the opposite in this case. The network has been constantly under development since its launch. Critics complain that this process might take too long. Unlike other projects, Cardano took years before it was able to operate under a decentralized Proof-of-Stake (PoS) consensus protocol. In addition, it took several Hard Fork Combinator (HFC) events before the network implemented smart contract capabilities. This adds to the critics that claim the network has been moving too slowly in the crypto space. The CEO at IOG believes the space is incentivized to prioritize “speed over quality”. Thus, Hoskinson predicted that projects with a long-term vision and development will prevail over those focused on the short term.
At the time of writing, ADA is one of the best-performing assets in the crypto top 10 by market cap. The cryptocurrency trades at US$0.6 with a 12% and 17% profit in the last 24-hours and weekly chart, respectively.