[Analysis] "Bitcoin hits record 'realized losses'…potential bottom signal"

Uk Jin

Summary

Bitcoin’s bear market has seen selling volume and realized losses surge to record highs.
He said stop-loss selling similar to the 2018 bear market, the March 2020 COVID-19 crash, and the 2022 Luna/FTX episodes has often led to a short-term bottom forming.
He said the Sharpe ratio has fallen to its lowest level since the prior bottoming phase, while capitulation selling and the unwind of excessive leveraged positions alongside an exodus of short-term investors are underway across the market.

With Bitcoin (BTC) stuck in a bear market, selling volume has reportedly surged to an all-time high. Some observers say this could indicate the market may be nearing a short-term bottom.

On the 21st (Korea time), crypto (digital asset) analyst Michaël van de Poppe, citing Glassnode data, said, "The latest correction has pushed Bitcoin’s realized losses to the highest level on record." Realized losses refer to losses that are locked in when investors sell a digital asset at a price below their purchase price.

Van de Poppe said, "This spike in losses is comparable to levels seen during the 2018 bear market, the March 2020 COVID-19 crash, and the 2022 Luna/FTX episodes," adding, "Such extreme stop-loss selling has often led to the formation of a short-term low."

Selling pressure appears to be intensifying mainly among short-term holders. Van de Poppe explained, "The Sharpe ratio, which indicates risk-adjusted returns, has fallen to its lowest level since the previous bottoming phase, and capitulation selling is underway across the market," adding, "Excessive leveraged positions and short-term investors are being flushed out of the market."

BTC