Bitcoin suffers its largest monthly decline since mid-2022 and its most significant weekly drop in over a year, leaving investors facing unprecedented losses and a crypto market cap taking a massive hit.
The cryptocurrency market is experiencing a significant downturn, with Bitcoin (BTC) set to record its worst month since June 2022. The largest cryptocurrency has fallen by 22% in February, making it the steepest decline since 2022.
Bitcoin is a decentralized digital currency that allows for peer-to-peer transactions without the need for intermediaries.
Created in 2009 by an individual or group using the pseudonym Satoshi Nakamoto, it uses cryptography to secure and verify transactions.
Bitcoin's supply is capped at 21 million coins, and its value fluctuates based on market demand.
As a store of value and medium of exchange, 'bitcoin' has gained popularity worldwide, with over 100 million users.
Investors Face Unprecedented Losses
The average purchase price of Bitcoin this year is around $97,880, leaving investors who bought BTC at this price facing an unrealized loss of over 18%. This week alone, BTC has dropped almost 18%, a decline not seen since the week ended November 13, 2022. The slide has left many investors severely underwater, with some facing losses as high as 20%.
Historical Context: Unrealized Losses at the Start of the Year
While this may seem unusual, it’s not entirely uncommon for investors to face unrealized losses at the start of the year. When the price of Bitcoin falls below the cost basis of recipients, investors often experience losses before recovering later in the year.
On-Chain Data Reveals Escalating Realized Losses
On-chain data indicates that realized losses have escalated as the price fell. Over the past three days, about $1 billion in realized losses have been recorded daily – the most since August‘s yen carry trade unwind, when Bitcoin fell to $49,000.
Crypto Market Cap Takes a Hit
The decline of Bitcoin has also had a significant impact on the crypto market cap, with a whopping $1.1 trillion wiped off, taking the total to $2.59 trillion, according to TradingView metric, Total.
