Bitcoin has experienced a significant decline of 29% in the past month, but a recent analysis from VanEck indicates that the peak of selling pressure may be behind us.
The report, titled Bitcoin ChainCheck and authored by digital asset analysts Patrick Bush and Matthew Sigel, reveals that the recent market downturn has effectively reset leverage levels and pushed market sentiment into “fear.”
Strong on-chain fundamentals coupled with a tightening supply from miners suggest that the current market conditions are more favorable than what present prices reflect.
“Fear Dominates”
The drop in Bitcoin’s value towards $67,000 has thoroughly eliminated many speculative investors. In just one month, Bitcoin’s Net Unrealized Profit/Loss (NUPL) metric plummeted into an “optimism/anxiety” zone and even dipped briefly into outright “fear” during the sharp price drop on February 2.
In conjunction with this shift in sentiment, futures open interest has fallen to its lowest dollar amount since September 2024. Nevertheless, despite this prevailing negativity, VanEck highlights that network activity remains impressively strong. Daily transactions are currently within the top 90th percentile of historical data, indicating that demand for the network persists regardless of price fluctuations.
Sellers Running Out of Steam
To identify who is behind this sell-off trend, VanEck examined Spent Volume by Age Band (SVAB) statistics.
The findings reveal that most cyclical selling pressure originated from “mid-cycle” holders—those who purchased their coins between one to five years ago.
A number of these investors likely expedited their sales to take advantage of anticipated ETF launches in early 2024 and potential post-election rallies.
However, current data shows a notable slowdown in distribution activities.
Over the last month alone, sales involving coins older than one year have significantly decreased. With sellers incurring approximately $22.5 billion in realized losses over this period, it appears there is considerable exhaustion among sellers as distribution slows down considerably.
A Potential Bottom?
The steep decline in Bitcoin prices combined with stagnant electricity costs have drastically squeezed mining margins; older models like Antminer S19 XP have become unprofitable for operators paying rates exceeding $0.07/kWh.
This situation has led to about a 14% reduction in Bitcoin’s network hash rate over the past three months.
VanEck points out that prolonged declines lasting over three months are uncommon for hash rates; historically speaking these capitulation phases followed by network contractions often precede substantial returns for Bitcoin within subsequent three-month periods.