Data Shows Bitcoin Top Buyers Already Capitulated, New Bull Rally Here?

Keshav Verma

1 year ago

3 mins read

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On-chain data suggests Bitcoin buyers who entered at the top may have already capitulated. Last time such a trend happened was back in July 2021, following which a new bull rally occurred.

Lackluster Bitcoin Sell-Off Recently May Suggest Top Buyers Have Already Capitulated

As per the latest weekly report from Glassnode, there hasn’t been any significant loss realization recently despite world-changing events taking place this week.

The relevant on-chain indicator here is the “net realized profit/loss,” which tells us whether the overall Bitcoin market is realizing profits or losses right now.

The metric works by looking at each coin on the blockchain to see what price it last moved at. If this price is less than the current price (that is, the selling price), then the coin sold at a profit. Investors harvesting a large amount of profit generally leads to a correction in the price.

On the other hand, the buying price being more than the current one would imply a realization of loss. The Bitcoin market observing a significant amount of losses being realized can be a sign of widespread capitulation.

Now, here is a chart that shows the trend in the BTC net realized profit/loss over the past year:

The value of the indicator seems to have been slightly negative recently | Source: Glassnode's The Week Onchain - Week 9, 2022

As you can see in the above graph, it looks like a net amount of loss has been realized recently. However, despite the massive bearish event that is the Russia-Ukraine war taking place this week, the magnitude of these losses is pretty small.

Usually, during such events, capitulation happens in the market where a huge negative spike in the indicator is observed.

An absence of such a spike may be a sign that those who bought Bitcoin at the top had already dumped their Bitcoin during the two capitulation events that preceded this one.

The report has also highlighted a similarity in the chart between the current trend and the one during the May-July mini-bear period.

Before the rally started, It looks like there were three negative spikes back then, with the third being much smaller in magnitude. This trend is quite similar to now.

If there is a pattern here, then the current third spike would mean a fresh Bitcoin bull rally may be beginning soon.

BTC Price

At the time of writing, Bitcoin’s price floats around $43.5k, up 15% over the last week.

Looks like the price of Bitcoin has shown a sharp surge over the past day | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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