Bitcoin was trading around $38,385 on Monday, May 2, still contending with the downward pressure that has dominated recent months. The flagship cryptocurrency, which climbed to nearly $70,000 in November of last year, has now dropped about 44% from that peak.
Last week the BTC/USD pair hit a one-month low of $37,614.
With markets broadly negative, roughly 70% of Bitcoin’s supply that is currently profitable could see a significant decline, pushing many Bitcoin holders into unrealized losses. That is the assessment from on-chain analytics platform Glassnode, published Monday.
On the brink of unprofitability
According to the report, the risk of further downside persists given Bitcoin’s recent high correlation with the S&P 500 and Nasdaq. This correlation remains even as markets remain unsettled by inflation concerns, higher interest rates, and geopolitical uncertainty.
A sharp sell-off in equities could therefore cascade into the crypto market and push a large cohort of BTC holders toward the “abyss of being underwater on positions,” Glassnode said in its newsletter.
On-chain data shows the cost basis for short-term holders (STH) sits at $46,910. That implies the average coin currently held by short-term holders carries an unrealized loss of about -17.9%. The market value to realized value (MVRV) ratio for STH also signals notable distress, with the oscillator sitting 0.75 standard deviations below the mean.
“With prices trading at $38.5k at the time of writing, the market would need to fall to $33.6k to push another 1.9 million BTC into unrealized loss (10% of supply),” the Glassnode team wrote.
Chart indicating that 10% of BTC supply could slip into unrealized losses. Source: Glassnode
During 2018–2019 and in March 2020, profitability dropped between 45% and 57%, suggesting that short-term holders could still face worse outcomes. If 40% or more of wallets slip into unrealized loss, the likelihood of a capitulation event would rise, potentially triggering a panic-driven cascade of selling across the market.