Bitcoin Seller Exhaustion Hits 4-Year Low in ‘Typical’ Bear Market Move
Bitcoin (BTC) sellers may not have capitulated enough, but current trends are “typical” of the end of bear markets.
According to data from the research firm Glassnode in the chain, seller behavior suggests that a macro price floor is forming.
Analyst: Selling exhaustion ‘near’ bear market lows
In the latest hint that Bitcoin’s latest bear market is coming to an end, Glassnode has revealed that the network is currently enduring a “perfect storm” of low volatility and high on-chain losses.
The seller’s exhaustion constant, calculated on the basis of one month’s rolling volatility and profitability for transactions in the chain, is thus at a long-term low.
As Twitter posts explains, such depressions are rare, having appeared only seven times before. Six of those times resulted in upside volatility, suggesting that Bitcoin could soon put an end to its bearish trend.
“Bitcoin seller fatigue constant has recorded its lowest value since November 2018,” commented Glassnode.
In a subsequent discussion, lead chain analyst Checkmate described the data as “typical” of bear markets, adding that such levels occur “near the lows.”
Seller Exhaustion Constant was originally created by ARK Invest and David Puell, responsible for the popular Puell Multiple indicator.
“The seller exhaustion constant shown below is the percentage of bitcoin total circulating supply in profit multiplied by the volatility over the past 30 days,” ARK analyst Yassine Elmandjra explained in an article last year.
“This metric measures whether the two factors align. In particular, the combination of low volatility and high losses is associated with capitulation, complacency, and a bottoming out of the bitcoin price.”
Not quite there yet
However, additional data on unused transaction outputs (UTXOs) shows that current levels of BTC moved on-chain at a loss do not match historical bear market bottoms.
Related: New Bitcoin Yardstick Calculation Says $20K BTC Now ‘Extraordinarily Cheap’
As of October 29, the latest date for which statistics are available, 75% of UTXOs were in profit – a stark contrast to late 2018, when the figure fell well below 50%.
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