Bitcoin may need $1B more losses in the chain before new BTC price bottom
Bitcoin (BTC) hodlers may need to triple their on-chain losses for the BTC price to hit a macro low.
According to the market research firm Baro Virtualthe 2022 bear market is not yet severe enough to match historical downtrends.
Bitcoin losses “only” amount to $671 million
With analysts predicting a return to $14,000 or lower for BTC/USD, the question of where Bitcoin will bottom is one of the hottest topics in the area this month.
For Baro Virtual, which analyzed data from the analysis platform Whalemap in the chain, it may be simple arithmetic.
Taking Whalemap’s rolling profit and loss (MPL) figures for on-chain BTC transactions, it noted that in the past, macro BTC price bottoms occurred when the losses of those transactions were equal to or greater than corresponding profits in the bull run that preceded them.
In other words, losses on the chain must equal or exceed gains on the chain from the previous bull run. Otherwise, in most cases, Bitcoin has fallen further later.
“Monthly MPL by Whalemap makes it almost certain, in most cases, to determine the global bottom of $BTC,” Baro Virtual wrote in Twitter comments on November 22.
“The condition is that the current loss level must be equal to or > than the maximum profit level of the previous bull run.”
Current realized losses are thus not large enough to match Bitcoin’s historical capitulation trend, it argued, leaving the door open for further BTC price capitulation.
However, how much is needed could mean that the ultimate macro bottom for Bitcoin is much lower than this week’s two-year low of $15,480.
“Now the losses are $671 million and the previous maximum profit is from $1.3 billion to $1.7 billion,” the thread continued along with an annotated chart.
“Therefore, losses ranging from $629M to $1.029B are still missing to confirm complete capitulation.”
BTC aims for 80% drawdown
The findings add to a narrative that similarly suggests the bear market of 2022 is yet to rival 2014 and 2018 – years that saw macro lows in Bitcoin’s two previous halving cycles.
Related: GBTC Next BTC Price Black Swan? — 5 things to know in Bitcoin this week
Against the last all-time high in November 2021, BTC/USD has so far managed a 77% pullback – less than in previous bear markets.
Data from the chain analysis company Glassnode nevertheless shows how Bitcoin is gradually entering a retest of maximum losses versus all-time highs.
Similarly, the percentage of total BTC currently held in surplus is almost, but not quite, at its lowest level synonymous with macro bottoms.
“Bitcoin’s 78% move over the past year is the biggest since 2017-18 and is now the second-longest at 376 days, trailing only the 2013-15 decline of 410 days,” Charlie Bilello, founder and CEO of Compound Capital Advisors , in addition noted this week.
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