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Bitcoin investors are on the rise, even if the price of Bitcoin is below $ 10,000

June 18, 2020

Since recovering from this week’s drop to $ 8,900, the price of Bitcoin (BTC) has struggled to rise above $ 9,600, and that level needs to move from resistance to support before further increases can occur.

CoinMarketCap’s largest digital asset has gradually been decoupled from stocks, but there is still a short-term correlation with traditional markets. This was observed on June 15 when BTC fell below the $ 9,000 mark due to heavy losses in the futures stock market.

Some investors and analysts fear that Bitcoin’s correlation with the stock market could break the use case that it is a store of value or digital gold.. In the meantime, others believe this could be a healthy signal as it shows that the digital asset is advancing in multiple traditional markets thanks to increased representation.

Bitcoin investors are on the rise, even if the price of Bitcoin is below $ 10,000Bitcoin investors are on the rise, even if the price of Bitcoin is below $ 10,000

Hedge fund manager and CEO of blockware solutions, Matt D’Souza, recently explained this in a Twitter thread:

“The fascinating thing about BTC is the numerous short-term correlations that occur. We have seen strong short-term correlations with gold, USD / CNY and more recently with US stocks. This indicates a broader range of market participants who own Bitcoin. “

According to D’Souza, the fact that Bitcoin has short-term correlations with the main markets and is also included in a growing number of institutional and retail portfolios shows the usefulness of investing in this asset as a hedge against market instability. short term. D’Souza explained The:

“Each correlation shows a different use case: digital gold, capital aircraft, risk asset (disruptive technology). The range of use cases means that Bitcoin is retained as an uncorrelated total asset beyond short-term intervals, a PROPERTY for every portfolio.”

Bitcoin against SP 500

Bitcoin against SP 500 – source: Skew.com

While the short-term correlation with the stock market may or may not be seen as a good sign of Bitcoin, Concern over stock market volatility continues as the coronavirus pandemic continues to weigh on economies around the world.

Given that the price of Bitcoin is prone to long handles, which can sometimes trigger cascading settlements, such as those seen on Black Thursday, there is a possibility that a sharp decline in stock markets will lead to another strong sell-off in the U.S. could crypto market.

BTC investors are still green

If global economic conditions begin to improve, the equity markets could also stabilize. It is also worth noting that most cryptocurrency investors still benefit from their Bitcoin positions.

Bitcoin and ether addresses for profit

Bitcoin and ether addresses for profit – source: glassnode

according to Glass knot, 78.9% of BTC holders are profitable. This number was derived from the realized price metric, which uses BTC’s average “buy” price as a wallet at the time of transfer to that wallet and determines whether the holder is a profit or a loss.

Will these headlines eliminate BTC to offset losses in traditional markets? Possibly, but as D’Souza emphasized, they tend to stick to the assets they make money with, since “it’s all about human psychology”. According to D’Souza.

“The way retailers / dealers work is that they feel overwhelmed and angry after diving in. Once they hit breakeven, they sell and are relieved. This leads to what is known as” overhead provisioning. “But if everyone is a winner, stop and enjoy the ride and the asset moves faster. The more winners, the better the asset moves higher without people sitting around trying to get out of the spot. Balancing and creating selling pressure. “

Bitcoin is maturing

Another measure that is used to determine a general equilibrium price for the network is the total cost basis. This metric shows that Bitcoin’s total break-even price is currently $ 5,776 and that BTC owners will benefit a total of 61% of the Bitcoin purchase. Ryan Watkins, recently a research analyst at Messari tweeted::

“The insights from the estimated cost base can provide an interesting insight into the behavior of potential investors. Based on the estimated cost base, observers can easily see at what price a crypto asset as a whole reaches the point of balance.”

Although these metrics are not perfect, They give investors a general idea of ​​how Bitcoin holders judge their investment, and investor sentiment has proven to be a strong force in both the crypto and traditional crypto markets.

Each metric offers a bird’s eye view of Bitcoin and shows that the cryptocurrency matures as an asset class when other market participants from different sectors allocate funds to BTC.