Home CryptocurrencyAltcoin Bitcoin may need $1 billion more in on-chain losses before BTC price hits a new bottom

Bitcoin may need $1 billion more in on-chain losses before BTC price hits a new bottom

by SuperiorInvest

Bitcoin (BTC) hodlers may need to triple their on-chain losses for the BTC price to reach the macro low.

According to According to market research firm Baro Virtual, the 2022 bear market is not severe enough to match historical downtrends.

Bitcoin losses “only” amount to $671 million

With analysts predicting a return to $14,000 or below for BTC/USD, the question of where Bitcoin will bottom is one of the hottest topics this month.

For Baro Virtual, which analyzed data from an on-chain analytics platform Whale mapit can be a simple matter arithmetic.

Looking at Whalemap’s moving profit and loss (MPL) data for on-chain BTC transactions, it noted that in the past macro BTC price bottoms occurred once the losses of those transactions were equal to or greater than the equivalent gains in the bull run that preceded them. .

In other words, losses on the chain must equal or exceed gains on the chain from the previous bull run. Otherwise, in most cases, Bitcoin later fell further.

“Whalemap’s monthly MPL is almost certain to set the $BTC global bottom in most cases,” Baro Virtual wrote in Twitter comments on November 22:

“The condition is that the current loss level must be equal to or > than the maximum profit level of the previous bull run.”

Thus, the current realized losses are not large enough to match the historical trend of Bitcoin capitulations, she argued, leaving the door open for further BTC price capitulations.

However, how much is needed could mean that the final macro bottom for Bitcoin lies well below this week’s two-year low of $15,480.

“Loss now $671M and previous peak profit is $1.3B to $1.7B,” continued the thread alongside the annotated chart:

“Thus, losses from $629 million to $1.029 billion are still short of confirming a full surrender.”

Bitcoin Moving Profit and Loss (MPL) Annotated Chart. Source: Baro Virtual/Twitter

BTC is targeting 80% drawdown

The findings add to the narrative that also suggests a bear market in 2022 is yet to rival 2014 and 2018 – the years that saw macroeconomic lows in BITcoin’s two previous two years. bisecting cycles.

Related: GBTC Next Price BTC Black Swan? — 5 things you should know about Bitcoin this week

BTC/USD has so far managed to fall 77% from its last all-time high in November 2021, which is less than previous bear markets.

However, data from on-chain analytics firm Glassnode shows how Bitcoin is gradually evolving indicative in a new test of maximum losses against all-time highs.

Drawing BTC/USD from historical highs chart. Source: Glassnode

Likewise, the percentage of total BTC currently held in profit is almost, but not quite, at the lows synonymous with macro bottoms.

Percentage of bitcoin supply in profit graph. Source: Glassnode

“Bitcoin’s 78% drawdown over the past year is the largest since 2017-18, and 376 days is now the second longest, trailing only 2013-15’s decline of 410 days,” added Charlie Bilello, founder and CEO of Compound Capital Advisors. he remarked this week.

The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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