Skip to main content

Bitcoin may need $1B more on-chain losses before new BTC price bottom

BTC price losses are not yet bad enough to rival previous Bitcoin bear market troughs, data suggests.

Bitcoin (BTC) hodlers may need to triple their on-chain losses for BTC price to put in a macro low.

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

Bitcoin losses “only” total $671 million

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

For Baro Virtual, which analyzed data from on-chain analytics platform Whalemap, it may be a matter of simple arithmetic.

Taking Whalemap’s moving profit and loss (MPL) figures for on-chain BTC transactions, it noted that in the past, macro BTC price bottoms occurred once those transactions’ losses were equal to or more than the equivalent profits in the bull run which preceded them.

In other words, on-chain losses need to equal or exceed on-chain gains from the prior bull run. Otherwise, in most cases, Bitcoin has fallen further later on.

“Monthly MPL by Whalemap makes it almost sure, in most cases, to determine the global bottom of $BTC,” Baro Virtual wrote in Twitter comments on Nov. 22:

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

Current realized losses are thus not large enough to fit Bitcoin’s historical capitulation trend, it argued, leaving the door open to further BTC price capitulation.

How much is needed, however, could mean that the ultimate macro bottom for Bitcoin lies much lower than this week’s two-year low of $15,480.

“Now the losses are $671M, and the previous max profit is from $1.3B to 1$.7B,” the thread continued alongside an annotated chart:

“Thus, losses from $629M to $1.029B are still missing to confirm complete capitulation.”
Bitcoin moving profit and loss (MPL) annotated chart. Source: Baro Virtual/ Twitter

BTC targets 80% drawdown

The findings complement a narrative that likewise suggests that the 2022 bear market is yet to rival 2014 and 2018 — years which saw macro lows in BItcoin’s two prior halving cycles.

Related: GBTC next BTC price black swan? — 5 things to know in Bitcoin this week

Versus the latest all-time high in November 2021, BTC/USD has so far managed a 77% drawdown — less than in prior bear markets.

Data from on-chain analytics firm Glassnode nonetheless shows how Bitcoin is gradually homing in on a retest of maximum losses versus all-time highs.

BTC/USD drawdown from all-time highs chart. Source: Glassnode

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

Bitcoin supply % held in profit chart. Source: Glassnode

“Bitcoin’s 78% drawdown over the last year is its largest since 2017-18 and at 376 days is now the 2nd longest, trailing only the 2013-15 decline of 410 days,” Charlie Bilello, founder and CEO of Compound Capital Advisors, additionally noted this week.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Comments

Post a Comment

Popular posts from this blog

Binance Australia raided by regulator just weeks after Europe HQ raid

Binance Australia’s offices have been raided by the nation’s finance regulator in an ongoing investigation into unlawful derivatives dealings — just weeks after the crypto exchange’s offices in France were raided as part of a money laundering probe. The Australian Securities and Investments Commission (ASIC) searched Binance locations on Tuesday, according to Bloomberg. The outlet cited anonymous sources familiar with the matter, who chose to keep their identities concealed. An ASIC spokesperson said it could neither confirm or deny the reports. Binance stated that it’s “fully cooperating” with local authorities. The news comes after Binance Australia had its derivatives license revoked in April. According to ASIC, it’s investigating the “extent of consumer harms” caused by the crypto exchange to local users. ASIC is probing allegations of Binance incorrectly classifying retail and wholesale investors in its derivatives business. Binance Australia ’s fiat on-ramp services we...
Read more

Toncoin (TON) Rallies 15% After Binance Listing: $10 Soon?

Image
The world’s largest crypto exchange by volume, Binance, has announced that it will begin spot trading for Toncoin (TON) from today. The development has led to a significant price rally for TON, which witnessed a 15% price bump following the news. The daily charts show that the asset is currently up by 8.4%. TON continues to glow red in the other time frames, falling 7.8% in the last week, 5.7% in the 14-day charts, and 14.2% over the previous month. Also Read: Toncoin (TON): The Telegram-Linked Crypto to Watch in 2024 Current Performance and Market Position Source: CoinGecko TON is currently the second-best performing cryptocurrency among the top 100 projects by market cap in the daily charts, following XRP. Recent Price Movements TON has displayed incredible performance this year. The asset was trading at around $2 in late February but has since risen to over $6. Based on the Telegram network, TON saw a significant price increase after integrating into the Telegram messaging plat...
Read more

copycat Stars Arena patches exploit on Friend.tech following a financial drain

Image
The Stars Arena has made a significant announcement, revealing that malevolent forces have been siphoning funds through a cunning loophole. However, the team has swiftly taken action, successfully patching the contract to avert any further harm. As per reports circulating on social media, the Stars Arena Web3 social media platform on the Avalanche network has fallen victim to a malicious attack. This unsettling incident was brought to light by a Stars Arena user, Lilitch.eth, on October 5, who took to X (formerly Twitter) to declare that over $1 million had been lost as a result. The Stars Arena team has unequivocally acknowledged this audacious attack, characterizing it as nothing short of a “war” waged against their platform. Surprisingly, they assert that the actual losses incurred amount to a mere $2,000, affirming that they have successfully plugged the exploit . Stars Arena, much like the popular Friend.tech, empowers users to acquire “shares” in the f...
Read more