Drop of 25% seen in Bitcoin traders' profit with BTC liquidity reported as "very low" 📉

Bitcoin Struggling Against Selling Pressure

Bitcoin is facing challenges this year as selling pressure continues to push the coin lower. Despite a hopeful start on August 23, the month has been tough for Bitcoin as sellers dominate the market.

Fewer BTC Holders Are Making Profits

As Bitcoin’s price continues to decline, fewer investors are making profits at current spot rates. An on-chain analyst revealed that there has been a 25% reduction in BTC held at a profit, resulting in nearly 5 million BTC in a loss position across different entities globally.

The significant amount of BTC in the red is putting pressure on the price of the coin.
Short-term holders (STHs) are more likely to sell their BTC during price drops, which could further drive prices down.

On the other hand, long-term holders (LTHs), who have held BTC for over six months, may help stabilize prices and potentially push Bitcoin towards $66,000 or higher. Institutions and long-term investors are typically less affected by short-term price movements.

Bitcoin Liquidity And Active Addresses Declining

Aside from fewer BTC holders profiting, the Exchange Liquidity Ratio for Bitcoin is currently very low. This ratio, which measures the overall liquidity in the BTC market, is below the 365-day moving average, indicating a cautious approach from traders.

Low liquidity in the market suggests that traders are hesitant to make significant moves.
Volatility may increase if prices continue to decline, leading to even lower liquidity as traders wait for a clear market direction.

In addition to falling liquidity, the number of active addresses on the Bitcoin mainnet is also declining. This drop in address activity reflects a decrease in investor interest and engagement in the Bitcoin network.

Hot Take: Bitcoin Faces Uphill Battle

Bitcoin’s struggles against selling pressure and weakening fundamentals paint a challenging picture for the cryptocurrency. As investors grapple with the ongoing market dynamics, the future trajectory of Bitcoin remains uncertain.