Bitcoin Realized Losses Top 2022 Peak by 19%, While Selling Pressure Eases

Bitcoin’s realized losses hit a record high in February, but selling pressure tied to those losses has since dropped by more than half, according to on-chain analyst Axel Adler Jr.

In a newsletter published July 24, Adler wrote that Bitcoin’s 30-day moving average of realized losses peaked 19% above the 2022 high and has since cooled by 56%.

The 30-day moving average of Bitcoin’s daily realized losses reached $1.37 billion on Feb. 20, Adler said. That was 19% above the previous cycle peak of $1.15 billion recorded on June 30, 2022.

Realized losses now stand at $597 million, down 56.5% from the February peak. Adler said capitulation-driven selling pressure has weakened sharply since then, though demand has yet to show a sustained recovery.

The rebound in realized profits has also been limited. The 30-day moving average of Bitcoin’s daily realized profits has dropped 92.7% to $257 million from $3.51 billion on Dec. 10 last year. That marks a 34.7% rebound from the low of $191 million on June 14, but the recovery is lagging the pace of the decline in losses.

Adler wrote that realized profits would need to rise consistently above $400 million to $500 million to indicate a recovery in demand rather than a simple rebound from the bottom.

The ratio of realized profits to realized losses also remains below the equilibrium line. The measure recovered to 0.43 after falling to 0.26 at its June low, but it is still well below 1.0. A ratio below 1.0 means realized losses exceed realized profits.

Nominal realized losses in the current cycle were larger than in 2022, but relative market stress was less severe, Adler said. In 2022, the realized profit-to-loss ratio fell as low as 0.13.

Still, he said it is too early to conclude that the capitulation phase is fully over. Bitcoin remains down 47.8% from its all-time high, and realized losses have exceeded realized profits on 190 of the 291 days since the peak in October last year.

If Bitcoin falls back below its June low of $58,535, realized losses could widen again and deepen market stress, he added.