Bitcoin‘s price fell over 5% today, reaching as low as $43,212. The reasons for such a decline are multifaceted, but investor psychology plays a crucial role. The market has not seen a consistent rise in Bitcoin’s value, with corrections often triggered by various factors.
Continued selling pressure pushed Bitcoin’s price down to the $43,000 region. Turkish crypto analyst Barış Kardeş had previously warned investors of a potential drop, citing a metric indicating that 95% of the supply was in profit, which historically suggests a high probability of a downturn.
Experts believe that when a large percentage of investors hold profitable positions, as indicated by the metric, they are likely to sell. The recent ETF approvals and their trading commencement were not surprising triggers for the sell-off.
On-chain data provides a clearer understanding of investor psychology by monitoring a wide range of behaviors, including miners’ profitability, selling trends, earnings status, and mining equipment activity. A significant portion of investors’ wallets being in profit (especially at 95%) typically leads to selling, which is currently reflected in Bitcoin’s price drop.
Despite current corrections, the outlook for cryptocurrencies remains positive. The spread of ETFs globally is still in its early stages, with expectations of increased demand leading to a supply shortage. Upcoming events such as Bitcoin’s block reward halving in April and potential interest rate cuts mid-year could further reduce new supply and boost demand, potentially accelerating price increases. Additionally, the U.S. elections in November with crypto-friendly candidates could further enhance market sentiment.