New investors rushed to purchase bitcoin at high prices amid the excitement surrounding the November U.S. presidential election. However, following a recent sell-off in global stocks, the cryptocurrency market has taken a hit, with bitcoin now trading at approximately $80,000, a significant drop from its peak in January.
Many of these new investors, particularly those who borrowed money to invest, are now facing losses as bitcoin's value declines. In the last three months, around 20 million new bitcoin addresses were created, representing about 1.5% of total existing addresses.
The ratio of new bitcoin purchases to sales, known as the spent output profit ratio, has fallen to 0.95, its lowest level in over a year. This indicates that recent buyers are experiencing notable losses, presenting a challenging environment for new investors.
Market analysts anticipate continued volatility, as concerns over U.S. tariff policy, economic conditions, and a tech industry downturn dampen risk appetite. Investment products linked to digital assets have seen consecutive outflows, with total assets under management decreasing to $142 billion. Bitcoin ETFs experienced significant outflows recently, reflecting the downward trend in the market.
While historical trends suggest that calm might follow market sell-offs, the recent volatility in both bitcoin and ether markets indicates ongoing instability. With implied bitcoin volatility reaching 69%, investors are bracing for further turbulence in the near future.
Overall, market experts believe that the current downturn may resemble past short-term fluctuations and expect potential highs in the future, despite the current challenges faced by bitcoin and other cryptocurrencies.