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The on-chain analytics firm Glassnode has revealed in a report how this historical bear market confirmation is yet to appear for Bitcoin in the current cycle.
Bitcoin Unrealized Loss Hasn’t Spiked For Long-Term Holders Yet
In its latest weekly report, Glassnode has discussed about the trend in the Unrealized Loss for the two major Bitcoin cohorts. The “Unrealized Loss” is an on-chain indicator that measures the total amount of loss that the BTC addresses as a whole are carrying.
The metric works by going through the transfer history of each coin in circulation to see what price it was last moved at. If this previous trading price is more than the current spot price for any token, then that particular token’s assumed to be holding a net loss.
The indicator takes the difference between the two prices to find the exact measure of this loss. It then adds up this value for all coins part of the circulating supply to find the network total.
In the context of the current topic, the usual version of the Unrealized Loss isn’t the one of interest, but rather a new variant known as the Unrealized Loss per Percent Drawdown. As the analytics firm explains,
As the market continues to contract, it’s reasonable to expect the absolute size of unrealized losses to grow. To account for this and normalize across drawdowns of varying magnitudes, we introduce a new variant of the metric: Unrealized Loss per Percent Drawdown, which expresses losses held in BTC terms relative to the percentage decline from the all-time high.
First, here is a chart that shows the trend in this Bitcoin indicator specifically for the short-term holders:
“Short-term holders” (STHs) refer to the Bitcoin investors who purchased their coins within the past 155 days. BTC is currently trading under the levels that it was at during most of this window, so these holders would majorly be in a state of loss.
The Unrealized Loss per Percent Drawdown showcases this trend, as its value has shot up recently. Interestingly, the indicator is already at a high-enough level to be comparable with values seen during the start of previous bear markets.
While the STHs are in substantial losses, the same isn’t true for the other side of the market: the “long-term holders” (LTHs).
These investors, who have been holding onto their coins since more than 155 days ago, are carrying no unrealized loss at all right now. In the past, the LTHs have generally seen their loss spike up during the transition to a bear market.
As the report notes,
Historically, substantial expansions in unrealized losses among long-term holders have often marked the confirmation of bear market conditions, albeit with a delay following the market peak.
So far, this signal hasn’t appeared for Bitcoin. Something to keep in mind, though, is the fact that the top buyers will soon promote into the LTHs. Once that happens, the loss among the group is probable to register an increase.
BTC Price
Bitcoin has seen a pause in the recovery rally as its price has taken to sideways movement around $85,000.
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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