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The Bitcoin and crypto market is still in turmoil due to the collapse of the FTX exchange. Many crypto assets have followed a correlation with the decline of FTX Token, FTT. As a result, the past few days brought an intense bearish pull to virtual asset prices.
With the outplay of recent events, the overall performance of the crypto market shows doubts and fears. As a result, investors and other participants have started a panic sell-off for most crypto assets.
Hence, the cumulative market cap has been in free fall since last week. Its total market cap stands at $824.19 billion at the time of going to press, down 1.92% in the past day.
Also, the declining trend caused by the FTX crisis has brought down the global primary cryptocurrency. Bitcoin has maintained a low correlation in the crypto market, creating more tension for the long-term holders.
BTC price drop creates selling pressure
The recent reports show that long-term holders of BTC are facing intense selling pressure due to the deteriorating market situation. The price of Bitcoin has been falling without restraint since last week.
At the time of writing, BTC is trading at USD 16,666, indicating an increase in the past 24 hours and its dominance over altcoins is 38.49%.
A report from Glassnode, an on-chain data provider, highlighted the MVRV ratio of Bitcoin’s long-term holders. The company noted that BTC’s long-term holders are currently facing acute financial stress. They have an average of -33% in unrealized losses.
According to the company, such a value is close to the lows of the bear market of 2018, where the peak unrealized loss averaged -36%.
The data provider noted that the last time long-term BTC holders experienced a similar stress experience was at the token’s price reversal point. This means that Bitcoin’s bottom could be just around the corner.
Bitcoin Selling Pressure To Get Even Worse?
However, Peter Schiff, a BTC critic, thinks the worst selling pressure for Bitcoin is yet to come. Shiff shared his older June 2022 forecast, stating that the selling pressure on Bitcoin for bill paying would only worsen as the recession deepens.
That could also happen if several holders lose their jobs, mainly employees in blockchain companies that would go bankrupt. So unfavorable changes for such holders will lead to more Bitcoin sell-offs.
After the collapse of FTX, many Bitcoin investors transferred their holdings from exchanges. They now refer to using self-preservation for their property. This has led to huge historical withdrawals of crypto exchanges.
According to the report from Glassnode, exchanges have witnessed one of the most significant cumulative declines in Bitcoin balance. The platforms registered a drop of 72.9K in seven days.
The data provider mentioned that the situation is similar to three historical periods with such massive BTC movement. They were in April 2020, November 2020 and June-July 2022.
Featured image from Pixabay, chart from TradingView.com