The price of Bitcoin (BTC) is showing significant resistance at the level of $17,000, and according to data from Glassnode, several metrics that track the speed of the sale, and the behavior of investors on chain, are starting to decrease the factors that fueled its strong sales .
FTX’s bankruptcy triggered a historic selloff that resulted in realized losses of $4.4 billion in bitcoins. Analyzing realized losses using the daily weighted average metric, Glassnode analysts found that chain losses are easing.
According to Glassnode, bitcoin has hit an all-time low in the ratio of realized profits to losses. Towards the end of the most recent bull market, realized losses were 14 times greater than profits, which historically coincides with a positive change in the market.
On-chain data also shows that realized losses are falling, the price of bitcoin is above the break-even price, and the realized cap is falling, eliminating excess liquidity generated by over-leveraged entities.
Realized capitalization indicates that excess liquidity has been exhausted
Realized capitalization is the net sum of capital inflows and outflows in bitcoins since the launch of BTC.
It is currently 2.6% higher than the May 2021 peak, suggesting that bitcoin’s all-time high has fallen, and excess liquidity from bad debt and over-leveraged entities has been flushed out of the market.
In the past, eliminating bad debt from the ecosystem established a launch pad for future bull markets.
According to analysts:
“The capitalization carried out in 2010-2011 saw a net outflow of capital equal to 24% of the peak. The capitalization achieved from 2014 to 2015 had the smallest, but not negligible, capital outflow of 14%. The 2017-2018 campaign saw a 16.5% reduction in realized capitalization, the closest to the current cycle of 17.0%. By this measure, the current cycle has seen the third largest relative capital outflow, and the 2018 cycle is now over, arguably the most relevant analogue of the mature market. »
The floor may be reached
Balanced price and delta price are algorithmic analyzes used to revisit previous bearish cycles. In previous bear cycles, the price of bitcoin has traded between the equilibrium price and the delta price 3.0% of the time.
The current balanced price range is between $12,000 and $15,500, and the current price delta is concentrated between $18,700 and $22,900. As with previous bear markets, bitcoin price is above the breakeven price, finding support at $15,500.
Also read: Here are the price levels to watch as bitcoin holds steady at $17,000
Although the bottom of the market is yet to be found, and there are still a handful of potential downside catalysts, chain analysis shows that the sentiment of market participants is slowly moving away from extreme bearish conditions, the spike in realized losses and forced sales approx.
A more accurate view of the cost of acquisition of bitcoin holders will also make it easier to anticipate reactions to any future volatility. A large amount of excess liquidity has been dispersed, which could create a firmer price floor for a sustained rally in BTC price.
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