On-chain data suggests that Bitcoin buyers who entered at the top may have already capitulated. The last time such a trend occurred was in July 2021, after which a new bullish rally ensued.
Bitcoin’s lackluster sell-off recently may suggest major buyers have already capitulated
According to Glassnode’s latest weekly report, there haven’t been any significant losses recently despite the world-changing events this week.
The relevant on-chain indicator here is “net realized profit/loss”, which tells us whether the overall Bitcoin market is making a profit or a loss at the moment.
The metric works by looking at each coin on the blockchain to see what price it last moved at. If this price is lower than the current price (i.e. the selling price), then the coin was sold at a profit. Investors making a large amount of profit usually leads to a price correction.
On the other hand, the purchase price higher than the current one would imply the realization of a loss. The Bitcoin market seeing a significant amount of losses may be a sign of widespread capitulation.
Now, here is a chart showing the trend in BTC net realized gain/loss over the past year:
The value of the indicator seems to have been slightly negative recently | Source: Glassnode’s The Week Onchain – Week 9, 2022
As you can see from the graph above, it appears that there has been a net loss recently. However, despite the massive bearish event that is the Russian-Ukrainian war taking place this week, the magnitude of these losses is quite small.
Usually during such events capitulation occurs in the market where a large negative rise in the indicator is seen.
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The absence of such a spike may be a sign that those who bought Bitcoin at the top had already dumped their Bitcoin during the two capitulation events that preceded this one.
The report has also highlighted a similarity in the chart between the current trend and that of the bearish mini-period from May to July.
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Before the rally started, it appears that there were three negative spikes at the time, with the third being much smaller in magnitude. This trend is quite similar to the current one.
If there is a pattern here, then the current third spike would mean that a new Bitcoin bullish rally could start soon.
BTC price
At the time of writing, the price of Bitcoin is hovering around $43,500, up 15% from last week.
It seems that the price of Bitcoin has shown a strong increase during the last day | Source: BTCUSD on TradingView Featured Image from Unsplash.com, Charts from TradingView.com, Glassnode.com
This post Data Shows Major Bitcoin Buyers Capitulated Already, New Bull Rally Here?
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