If you’ve ever bought Bitcoin, there’s a 40% chance your investment is currently underwater.
Both traditional and crypto markets have been in free fall the past several days, hurtling into bear territory, where assets trade at 20% or more below their last peak. The benchmark S&P 500 is down 15% this year, while half the stocks on the Nasdaq index are down over 50% from their highs.
Bitcoin has dived further. The popular cryptocurrency is down roughly 55% from its November peak of $69,000, currently trading at below $32,000. For a lot of Bitcoin holders, that means their portfolio has dipped into the red.
According to research from blockchain analytics firm Glassnode, only 60% of Bitcoin investments remained profitable when the cryptocurrency was priced at $33,600 per unit. The remaining 40% of investments sank below water. As Bitcoin’s price has tanked even lower, now floating between $31,000 and $32,000, an even larger share of investments are in the red.
“This decline in profitability is the fourth most severe over the last three years,” Glassnode said, referring to the percentage of total investments that became unprofitable within the past month alone, which is 15.5%.
In July and December of 2021, the number of profitable investments on the Bitcoin network dropped 18.1% and 19.1%, respectively, marking the third- and second-worst ever monthly declines. The largest monthly decline in profitability was March 2020, Glassnode says, when 35.4% of the market fell into loss in 30 days.
According to Glassnode, Bitcoin’s sudden price plunge is being driven by both “shrimps and whales” racing to get money out of the market, meaning investors with both small and large stakes in the crypto are all seeking to avoid the crash.
Glassnode says there has been “a high degree of urgency” associated with Bitcoin transactions this past week. The total value of transaction fees has shot above the high set during the last crypto crash in December.
According to the group, more than $3.15 billion in value has moved “into or out of” Bitcoin exchanges this past week—the highest dose of liquidity since November 2021, when exchange flows last peaked.
But not everyone is selling. Some investors are still “hodling” their stake—an insider term for holding on to a position—or even strengthening their position by buying the dip and rushing into the weaker market. On Monday, the president of El Salvador announced his government had purchased 500 Bitcoin, which the president made legal tender in September last year.
But Glassnode says smaller investors—those holding less than one Bitcoin—have been the “strongest accumulators” of cryptocurrency during the selloff. However, even that cohort of retail-level diehards is buying at a slower rate than before.