On-chain data shows the Bitcoin Realized Loss has plunged recently, a sign that capitulation from the investors could be over for now.
Bitcoin Realized Loss Has Finally Calmed Down To Low Levels
As pointed out by CryptoQuant author Axel Adler Jr in a new post on X, there are only a few Bitcoin sellers left who are willing to take a loss. The on-chain indicator of relevance here is the “Realized Loss,” which, as its name suggests, keeps track of the total amount of loss that BTC investors are realizing through their selling.
The metric works by going through the transaction history of each coin being sold/transferred to see what price it was transacted at prior to this. If the previous selling price for any coin was more than the spot value it’s being moved at now, then its sale is leading to the realization of some loss.
Naturally, the exact value of the loss is equal to the difference between the two prices. The Realized Loss adds up this difference for all underwater coins being moved, to determine a total value for the entire network. Like the Realized Loss, there is also another indicator called the Realized Profit, which keeps track of the sales of the coins of the opposite type (that is, those with cost basis under the current price).
Now, here is a chart that shows the trend in the 7-day moving average (MA) of this Bitcoin indicator over the last couple of years:
The value of the metric appears to have gone down in recent weeks | Source: @AxelAdlerJr on X
As is visible in the above graph, the 7-day MA of the Bitcoin Realized Loss has shown a decline recently, suggesting fewer sales of loss-carrying coins have been happening. At present, the investors are realizing losses of around $4.7 million, which isn’t that significant a value. From the chart, it’s apparent that there were a couple of phases this year where the investors had been participating in much stronger loss-taking.
The first of these had interestingly occurred around the time of the cryptocurrency’s new all-time high (ATH) and the initial bearish consolidation that had followed it.
Whenever Bitcoin reaches a new high, 100% of investors enter into a state of profit, so the only holders who would be able to sell at a loss after the ATH would be those who bought at the top itself.
This panic selling from the top buyers lasted for around 72 days before the market reached a state of calm again. This period of low loss realization couldn’t be sustained, though, as the continued slump in the Bitcoin price had forced the weak hands to capitulate once more.
This second event, at 99 days, lasted longer than the first, and it’s still unclear if it has ended. It now remains to be seen whether the latest low level of the Realized Loss will continue for Bitcoin or if it’s only a temporary deviation and investors will go back to loss selling again.
BTC Price
At the time of writing, Bitcoin is trading at around $63,400, up more than 7% over the last week.
Looks like the price of the coin has been rising over the last few weeks | Source: BTCUSDT on TradingView