'Realized Losses' Might Prove Bitcoin's Gain if Signaling a Market Bottom, Glassnode Says

Sell-off waves are tallying record realized losses and pushing HOLDer saturation towards previous bear-market recovery levels.

AccessTimeIconJul 19, 2022 at 9:13 p.m. UTC
Updated May 11, 2023 at 4:50 p.m. UTC

Signs of seller exhaustion are creating conditions that resemble a market bottom for bitcoin (BTC), according to a report from blockchain analysis firm Glassnode.

Realized losses, or the losses incurred by selling assets, show the extent of investor capitulation. The magnitude can be charted using blockchain data.

The stablecoin terraUSD (UST) and its companion token LUNA’s collapse in May triggered a wave of realized losses totaling $28 billion over 30 days, according to Glassnode. When crypto prices plunged below the 2017 all-time high on June 18th, realized losses jumped to a record high of $36 billion over 30 days.

The crypto market saw record monthly realized losses in June 2022. (Glassnode)
The crypto market saw record monthly realized losses in June 2022. (Glassnode)

As retail and short-term investors are purged from the market during these mass sell-offs, the saturation of "HODLers," or the cohort of price-insensitive long-term investors, swells. The more HODLers there are, the stabler crypto prices become and the likelier it is that the market has bottomed out.

Over 80% of the dollar (USD) wealth stored in bitcoin is now older than three months, signaling the sell-off waves in May and June have exhausted nearly all short-term traders.

This percentage coincides with data from the end of the 2012, 2015 and 2018 bear market bottoms, which all occurred when the USD wealth older than three months climbed above 80%.

“Against a backdrop of extremely challenging macroeconomic and geopolitical turmoil, bitcoin is reaching peak investor saturation by high conviction HODLers, and it is becoming quite plausible that a genuine bottom formation could be underway,” Glassnode wrote.


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