Blockchain analytics agency Glassnode is weighing in on the potential for a second Bitcoin panic sell-off following the flagship crypto asset’s 50% collapse from its all-time excessive of $64,802.
In their weekly letter, Glassnode says that the quantity of realized losses that occurred throughout the current crash eclipsed all different capitulation occasions in Bitcoin’s historical past, together with March 2020, Nov 2018, and the sell-off that concluded the final bull market in January and February 2018.
The agency additionally takes a look on the quantity of unrealized losses in the marketplace and contemplates whether or not these shedding positions can be offered as soon as Bitcoin ignites a aid rally.
“A significant query that continues to be is what’s the magnitude of unrealized losses, or in different phrases, what number of underwater cash might nonetheless panic promote out? We examine the Relative Unrealised Losses metric which presents the ratio between complete underwater worth and the present market cap.”
Glassnode concludes that between 9% and 9.5% of your entire market cap of Bitcoin, presently $700 billion, are unrealized losses, equating to about $65 billion in underwater worth.
The analytics agency provides that the Net Unrealized Profit/Loss (NUPL) metric, which determines whether or not the BTC market is in a state of revenue or loss, fell beneath the 0.5 degree, indicating that solely half of Bitcoin’s market cap is in earnings. While vital, the 0.5 NUPL space has acted as help in earlier bull runs, with the 2017 cycle hitting this degree 4 instances earlier than the height. In the 2021 bull market, the newest correction marks the primary time BTC has reached the 0.5 level.
Glassnode says that those who had been hit hardest by the market crash had been by far the short-term holders.
“Short-term holders presently maintain an combination unrealised lack of -33.8% of the market cap on their cash. This compares solely to essentially the most excessive drawdowns in Bitcoin historical past together with:
The first Bull high in 2013
Three occasions within the 2014-15 bear
Four occasions within the 2018 bear
March 2020 capitulation.”
While an extra panic sell-off for Bitcoin is within the playing cards, the crypto insights platform believes BTC is in a wholesome spot.
“Overall, this flush of hypothesis and leverage is a wholesome and crucial course of, because it removes extreme hypothesis and compelled sellers to permit extra natural worth motion to return down the highway.”
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