Bitcoin's Worst Month Since 2011: What Does It Mean?

Bitcoin tumbled in June at its worst since 2011. On the other hand, when the analysis is broadened to consider the businesses that accept Bitcoin as well as those that use it for transactions and storage, its fundamental base remains powerful.

Bear markets in cryptocurrency are known to be painful, but the month of June was especially trying for the crypto faithful as a combination of factors led to the price of Bitcoin (BTC) dropping 37.9%, its worst monthly performance since 2011.

Bitcoin monthly performance. Source: Glassnode.
Glassnode's monthly update on Bitcoin.

The continued widespread weakness has caused most of the so-called Bitcoin “tourists” to exit the space, leaving only the most dedicated holders behind, according to blockchain analytics firm Glassnode.

Despite Bitcoin's recent struggles and the fact that crypto traders are currently experiencing the worst bear market in crypto history, some metrics point to a positive outlook for the sector and suggest that its hodler base is still strong.

As hodling increases, more people are dedicated to crypto

Glassnode noted that a significant number of Bitcoin wallets are usually emptied out during major sell-off events and in the early stages of bear markets. Since the bear market of 2018, however, the exodus has been less severe, showing that “the resolve of the average Bitcoin participant is increasing," Glassnode said.

During the recent address purge, only 1% of Bitcoin addresses completely emptied their holdings as compared to 2.8% in April and May 2021, and the 24% that did so in January through March 2018.

Number of Bitcoin addresses with a non-zero balance. Source: Glassnode
The number of Bitcoin addresses with a non-zero balance. Glassnode's data indicates that n Bitcoin addresses have at least one coin in them, with a being the

Even though Bitcoin's on-chain activity remains subdued and the price is in bear territory, the most committed Bitcoin holders will hold their positions until market volatility calms down and a floor in BTC price is established.

The Bitcoin community needs to return to the methods that made it successful in the past

As traders have been withdrawing their tokens from exchanges at a frantic pace, the ethos of "not your keys, not your crypto" has once again gained traction in the crypto community. The collapse of the Terra ecosystem, potential insolvency of Celsius and the implosion of Three Arrows Capital have all served as a stark reminder that crypto is intended to be stored in cold storage. 

Bitcoin exchange net position change. Source: Glassnode
The net position of the exchanges that trade Bitcoin fluctuates.

The total number of Bitcoin held on exchanges has decreased from 3.15 million to 2.4 million since March 2020, with a total outflow of 750,000 BTC and 142,500 in the past three months.

With platforms like Celsius stopping withdrawals and smaller exchanges starting to impose withdrawal limits, the desire to regain control over crypto assets has become a top priority for holders.

In the long-term, locking up tokens and not having them readily available to sell on exchanges can actually be seen as a positive because it lowers the likelihood of further capitulation.

As retail grows in popularity, merchants are becoming more interested in it.

During the worst month in Bitcoin's history, an increasing interest from wallets holding less than 1 BTC was encouraging. These wallets are more likely to represent the retail segment of the crypto market.

According to Glassnode, the “shrimp” wallets have been buying up Bitcoin at the rate of 60,460 BTC per month. This is "the fastest speed in history," as they call it.

Bitcoin shrimp wallet net position change. Source: Glassnode
The Bitcoin shrimp wallet net position changed.

Even though crypto is in a bear market, there are some positive signs that suggest that the end of Bitcoin has been overstated.