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NEW DELHI : The cryptocurrency market, especially bitcoin, has taken a turn for the worse over the last week after Tesla chief Elon Musk expressed concerns over its power consumption. The digital asset has slumped more than 20% over the last seven days to hit a low $43,780.83, while its dominance has plunged to a three-year low of 40%. Moreover, the sentiment for bitcoin has hit the "extreme fear" level, the lowest since last April.

However, recent data has shown that despite the fear, mostly newer market entrants have panic sold and realized losses, while long-term "hodlers" appear relatively unfazed by the news.

‘Hodl’ stands for “hold on for dear life", which suggests that one is holding on to their cryptocurrencies despite the price dips.

Still, the series of Musk’s tweets have come a major negative for the digital asset. Musk in his tweets claimed that 10 times faster and larger blocks on dogecoin are a viable alternative. This led to the speculation that Tesla has exited its bitcoin holdings of $1.5 billion, adding to the downward pressure on bitcoin. However, he later clarified that Tesla was still having exposure to the digital currency.

“Newer market entrants have panic sold and realized significant losses on their coins, with both the aSOPR and STH-SOPR dipping below 1.0 once again," on-chain data and intelligence platform, Glassnode has said in a note

Both these metrics consider the degree of profit realized by coins moving on-chain, with higher values indicating profitable coins were on the move, and values below 1.0 indicating most coins were last moved at higher prices.

“This is the second major dip below 1.0 for STH-SOPR during this correction, suggesting widespread panic selling by new holders," the company added.

Bitcoin is trading around 30% lower than its all-time high of $64,804.72, hit on 14 April 2021. At 2 pm IST, the digital asset was trading flat at $45,246, as per CoinGecko.

According to Glassnode, the total count of addresses holding a non-zero bitcoin balance has also pulled back by 2.8% from the recent all-time high of 38.7 million addresses. “A total of 1.1 million addresses have spent all coins they held during this correction, again providing evidence that panic selling is currently under way," it added.

Overall, the bitcoin market is in a historically significant correction. There are strong signals that short-term holders are leading with panic selling, however, long-term holders are stepping in to buy the dip and their confidence is largely unshaken.

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