By Yasin Ebrahim

Investor.com turned positive Monday after its drop below $33,000 attracted buyers. However, sentiment remains fragile as long-term crypto holders are suffering the worst losses since the start of the pandemic.

It was 4.4% higher at $36,868

BTC plummeted to a $32,937 low, its loss to 52% since November’s peak. It was also the second-worst selloff in the history of the 2018-2021 bear market. The reason for this is that investors fled from risk assets due to concerns about Federal Reserve tightening its monetary policies.

Bitcoin is no stranger to gut wrenching selloffs, but this most recent slump has been beyond the norm for the popular cryptocurrency, and is “likely to change investor perceptions and sentiment at a macro scale,” Glassnode said.

“Drawdowns of this magnitude are markedly higher than the -20% to -40% range seen in the 2017 and 2020-21 bull cycle corrections,” it added.

Bitcoin was developed in an era of global central bank slashing interest rates and adding assets to their balance sheets.

These tailwinds however appear to be ending and BTC is now facing a new normal. 

“We were very favourable environment for the past few years where the balance sheets of central banks and the Fed have been exploding,” … but now they’re potentially acting in a much more responsible fashion,” Seamus Donoghue, VP Strategic Alliances at Metaco, said in a recent interview with Investing.com.

Still, the bitcoin faithful, or long-term holders, aren’t ready to throw in the towel just yet even as losses have piled up.

“This is the highest volume of LTH supply held at a loss since the March 2020 sell-off,” according to Glassnode.

The recent wild swings in the price of bitcoin, which often hogs the limelight and the headlines, shouldn’t be mistaken for dwindling interest or demand for blockchain technology, which remains on the up and up.

“This technology has proven itself as potentially more efficient than existing payment networks, which builds adoption for the space as a whole,” Donoghue said.

Growing adoption will lead eventually to all-important network effects which will probably underpin long-term BTC prices.  

“The growth of the network will put a floor in the market eventually as more people have access to this [cryptocurrencies] … I think the network really drives the price longer term,” Seamus added.

“The issue we’re facing right now is not a long term issue. This is something that we will face in 2022. However, I believe the longer-term trends and underlying growth are very bullish.