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

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bitcoin (BTCTraders may need to triple their on-chain losses against the BTC price to reach the bottom.

according to For market research firm Baro Virtual, the 2022 bear market is not severe enough to catch up with historical bearish trends.

Bitcoin’s total loss is “only” $671 million

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

For Baro Virtual, which analyzed data from its on-chain analytics platform Whaleit might be simple mathematics.

Taking Whalemap’s Moving Profit and Loss (MPL) figures for on-chain BTC transactions, I noticed that in the past, overall BTC price bottoms occurred once the losses on these transactions were equal to or more than the equivalent profits in the bull run that preceded them.

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In other words, the on-chain losses must equal or exceed the on-chain gains from the previous bull run. Other than that, in most cases, the price of bitcoin has dropped more later on.

Baro Virtual wrote in Twitter comments on November 22:

“The condition is that the current loss level must be equal to or > the highest profit level of the previous upward trajectory.”

Thus, the current realized losses are not large enough to match Bitcoin’s historical capitulation trend, he argued, leaving the door open for further Bitcoin price capitulations.

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

“Now the losses amounted to $671 million, and the previous maximum profit was from $1.3 billion to $1.7 billion,” the thread continued, along with an annotated graph:

Thus, losses from $629 million to $1.029 billion are still missing to confirm a complete surrender.
Annotated Bitcoin profit and loss (MPL) chart. Source: Baro Virtual / Twitter

BTC Targets 80% Retreat

The results complement a narrative that also indicates that the bear market of 2022 has yet to rival that of 2014 and 2018 — the two years of significant declines in BItcoin’s previous two years. half cycles.

Related: Next GBTC Black Swan BTC price? 5 things to know in Bitcoin this week

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Against its latest all-time high in November 2021, BTC/USD has so far managed to pull back 77% – less than previous bear markets.

However, data from on-chain analytics company Glassnode shows how Bitcoin is performing incrementally homing In retesting maximum losses against all-time highs.

The BTC/USD pair has pulled back from the chart to an all-time high. Source: Glassnode

Likewise, the percentage of total BTC currently held in earnings is roughly, but not quite, at lows synonymous with overall lows.

Bitcoin bid percentage held profit chart. Source: Glassnode

“Bitcoin’s 78% decline over the past year is the largest since 2017-18, and at 376 days is now the second-longest decline, trailing only the 410-day drop from 2013-2015,” Charlie Pellio, founder and CEO of Compound Capital Advisors, added. till then pointed out this week.

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