Bitcoin [BTC] holders anticipating a bear market floor should read this

Bitcoin [BTC] prices have been unusually volatile in recent weeks. This can be seen in contrast to the broader financial markets – stocks, credit and foreign exchange markets – which have been significantly volatile over the same period, according to the latest Glassnode report. report.

While there was speculation that BTC investors were looking to establish a bear market floor, Glassnode considered some on-chain metrics to drive this point further.

learning from history books

First of all, Glassnode considered the percentage of BTC profit supply. According to him, tracking the supply decline in earnings was a useful tool in identifying “points of heightened financial stress, which have exhausted sellers in previous cycles.”

In previous bear markets, the BTC profit supply percentage during the bottom formation stages ranged from 40% to 42%. However, in the current bear market, Glassnode found that 50% of the circulating supply of BTC was still an unrealized profit. This, according to the blockchain analytics platform, indicated that,

“The profitability of the offer remains high in relation to historical analogues. This hints that a complete detoxification of profitability may not yet have occurred.”

Source: Glassnode

Additionally, Glassnode considered BTC’s relatively unrealized gains metric. Taking a trip down memory lane, the analytics firm found that every time the aggregate unrealized gain squeezed to around 30% of BTC’s market cap, the sellers who initially devastated the market ended up depleted. In the current market, the drop in price from the all-time high in November 2021 brought the metric down to 0.37.

Glassnode also took a closer look at BTC’s net unrealized gain/loss (NUPL) metric. This was used to assess the difference between the network’s unrealized gains and losses as a proportion of market capitalization.

It found that the BTC NUPL has hovered between 0% and -15% since the beginning of June in two separate events, lasting a total of 88 days so far. Furthermore, in previous markets,

“NUPL has traded at levels below -25% in previous cycles and was negative between 134 days (2018-19) and 301 days (2014-15).”

Glassnode then evaluated BTC’s adjusted net unrealized gains/losses (aNUPL) metric to correct for any contribution from dormant BTC supply. And the intelligence platform discovered that,

“aNUPL has been trading below zero for the past 119 days, which is comparable to the length of the bottom formation phase of previous bear markets.”

Source: Glassnode

How has the pain been distributed?

Looking at the category of BTC investors who suffered the most “financial stress”, Glassnode analyzed the short-term holder supply of BTC on profit and loss metrics and the long-term supply on loss.

Currently, 18% of the total BTC supply was held by short-term holders. 15% remained at an unrealized loss, while 3% of the BTC supply held by short-term holders remained in profit.

According to Glassnode, this 3% is “likely approaching a degree of seller exhaustion” following the prolonged drop in BTC price.

Source: Glassnode

As for long-term BTC holders, 31% of the coin’s total supply was held by this category of losing investors. Historically, when the losing long-term supply of BTC exceeded 20% of the total supply, the likelihood of capitulation among long-term investors increased.

However, with the metric at 31%, the market may have passed this stage. According to Glassnode this scenario,

“It suggests a condition similar to previous bottom formations. The market has been in this phase for 1.5 months, with the previous cycle length ranging from 6 to 10 months.”

Source: Glassnode

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