Bitcoin Capitulation 4th Worst Ever As BTC Hodlers Lose $10B In One Week
Bitcoin (BTC) hodlers have capitulated more than at almost any point in Bitcoin’s history this month.
Data from the chain analysis firm Glassnode confirms that the BTC sale in November 2022 was the fourth largest ever.
Bitcoin investors see multi-billion dollar losses
In the latest edition of its weekly newsletter, “The Week On-Chain”, Glassnode got to grips with the impact of the FTX debacle on BTC investors.
Results have been mixed, it reveals, with a major loss of confidence on the one hand triggering loss-making selling of funds, while “strong accumulation” has also occurred.
For those entering BTC under current conditions, however, life has been anything but simple.
“A consistent event that motivates the transition from a bear back to a bull market is the dramatic realization of losses, as investors give up and capitulate on a large scale,” explained Glassnode.
“November has seen the fourth largest capitulation event on record, with a 7-day realized loss of -$10.16 billion. This is 4.0 times greater than the peak in December 2018, and 2.2 times greater than March 2020. »
While the dollar capitulation can be explained thanks to BTC/USD trading five times higher than at the end of 2018 and 4.5 times higher than in March 2020, it is no secret that cold feet have characterized the crypto markets since FTX imploded.
As Cointelegraph reported, right after the event, hodlers sat on 50% of the BTC supply with an unrealized loss.
Glassnode referenced Bitcoin’s adjusted MVRV ratio, which shows that coins moving on-chain are returning loss-making levels rarely seen before in what it calls “peak under-performance.”
Adjusted MVRV ratio is the ratio of the market value of BTC to its realized value, minus the earnings effect of coins that have been dormant for seven years or longer.
“This calculation currently yields a value of 0.63 (average unrealized loss of 37%), which is very significant since only 1.57% of trading days in bitcoin history have recorded a lower adjusted MVRV value,” the newsletter said .
“In other words, if we discount profits held across the presumably lost supply, today’s market is the most underwater it has been since near pico bottoms in December 2018 and January 2015.”
Buying diplike it is December 2018
“The Week On-Chain” nevertheless contains some good news for market players.
Related: Bitcoin Shrugs Off BlockFi, China Protests As BTC Price Holds $16K
Despite the earlier losses, hodlers have been accumulating BTC aggressively since – and the trend includes everyone from the smallest “shrimp” to the largest whales.
“From a comparative point of view, the recent strong accumulation score following the recent sell-off is similar to that of late 2018,” stated Glassnode.
It added that similar Black Swan events in Bitcoin’s past, including recent ones like the Terra LUNA collapse, triggered similar investor reactions.
An accompanying chart, the 7-day moving average (MA) of Accumulation Trend Score, showed current conditions as purple – characteristic of mass accumulation. Yellow, conversely, points to mass distribution of BTC on the market.
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