The data across the chain shows that Bitcoin investors are not participating in any significant amounts of short losses at the moment. That’s what it might mean.
The entity’s adjusted realized Bitcoin loss has remained subdued lately
According to data from the on-chain analytics company glassCurrencies that recently traded near the current spot price were acquired. A relevant indicator here is the “Entity-Adjusted Realized Loss,” which measures the total loss that investors realize with their current sale.
This meter works by looking at the sequential history of each sale to see the price at which it was purchased. If this previous price of any currency is more than the current spot price (at which it is now moved), selling the currency results in a loss. Naturally, the currency will move with a profit in the opposite case.
The indicator has an “Entity Adjustment” because it only counts transactions/sales between different entities rather than individual portfolios. Entity here refers to a single address or group of addresses controlled by the same investor, as determined by Glassnode analysis.
Since transfers between addresses of the same investor will not be considered a sale, it makes sense to filter these transfers of data for realized loss.
Now, here’s a chart showing the trend in adjusted realized loss for a Bitcoin entity over the past few years:
The value of the metric seems to have been moving sideways in recent days | Source: Glassnode on Twitter
As the chart above shows, the Bitcoin entity’s adjusted realized loss has been at relatively low values for a few months. The rally in the price of the cryptocurrency occurred during this period, so it stands to reason that investors need not sell at a loss while the rally continues.
However, recently, things have been different. BTC has been declining for the past few weeks, but there has been no change in the value of the index. This is in contrast to what is generally observed during rollbacks originally.
Even earlier this year, when the rally paused in March and the value of the cryptocurrency saw a significant drop, there was a spike in realized losses, though nothing super significant. The recent lower values are also in spite of the FUD that has spread across the sector following the SEC accusations against Binance and Coinbase.
Last day, the market tumbled again as the Fed revealed its decision to pause interest rate increases for the time being, but also reported that more hikes are coming later in the year.
Despite this new hit by the Bitcoin price, the realized loss did not register any increase, as it is still only $91.3 million in value, which is much lower than in the past capitulation events.
The fact that investors haven’t started selling at a loss means there is still enough panic in the market just yet; Losing investors are content with gradually riding the current market.
BTC price
At the time of writing, Bitcoin was trading at around $25,000, down 5% in the past week.
Looks like BTC has observed a sharp drop today | Source: BTCUSD on TradingView
Featured image from Thought Catalog on Unsplash.com, Charts from TradingView.com, Glassnode.com
