Oil Price Surge Tests Bitcoin’s Bottoming Process Amid Multi-Million Dollar Capital Flush

• Glassnode stated that rising oil prices and renewed geopolitical tensions have added to the macro pressures weighing on Bitcoin.
• The analytics firm noted that Bitcoin has traded below the cost basis of both long-term and short-term holders for nearly five months, one of the longest such stretches on record.
• It added that long-term holders are realizing losses of roughly $280 million per day, the highest level since late 2022.

Bitcoin (BTC) was trading at around $62,000 on Wednesday afternoon and is amid winding down its slow “bottoming” process, according to Glassnode. 

In a new report on Wednesday, the analytics firm stated that that the jump in crude oil prices were only the newest macro shock to hit Bitcoin after President Donald Trump announced that the ceasefire with Iran was now “over.” 

West Texas Intermediate (WTI) crude oil prices have shot up to around $74 per barrel, up by nearly 8% over the past week, dragging Bitcoin’s weekly gains down to 5% from 9.4% on the week. The United States Oil Fund (USO) climbed 2.5% in midday trade, with retail sentiment on Stocktwits rising to ‘bullish’ from ‘neutral’ territory over the past day and chatter rose to ‘normal’ from ‘low’ levels. 

Meanwhile, Bitcoin’s price slumped by nearly 3% in the last 24 hours even as it managed to climb back above $62,000. Retail sentiment around the apex cryptocurrency dipped to ‘bullish’ from ‘extremely bullish’ territory over the past day, accompanied by chatter at ‘normal’ levels. 

Long-Term Bitcoin Holders Bleed $280M Daily

Glassnode noted that Bitcoin has now remained trading below the average price paid by both long-term and recent investors for nearly five months, one of the longest such periods seen in the BTC’s history. 

Holders in the long run who had bought near the peak have become increasingly desperate to exit their positions and sell off their holdings at a loss, where these losses amount to about $280 million per day – the largest since December 2022. For Glassnode, until this selling pressure stops, any hope of a recovery seems farfetched, though such periods in the past have always paved way for bottoming.

Bitcoin Bottom Not Yet Confirmed

Glassnode went further to state that spot Bitcoin ETFs are experiencing outflows exceeding inflows, although outflows have reduced significantly from about $193 million per day in early June to about $89 million per day currently. The company also stated that trading volumes in the spot Bitcoin ETF are still not higher than what they were in October last year, which shows that the large institutional players are not back yet.

Moreover, it noted that while traders have become less bearish with options, a lot of them are paying up to insure themselves against more falls in price.

According to Glassnode, although the market appears to be bottoming, a sustained cooldown on the capitulation of long-term holders, as well as stabilizing flows in ETFs is required to confirm it.

Read also: Iran War Fears Drag Bitcoin Lower After Trump Declares Ceasefire Is ‘Over’

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