The Bitcoin market appears to be experiencing increasing sell-side pressure as recent price action reveals the dominance of bears. Interestingly, another on-chain assessment suggests that the current market movement could be a direct effect of the rising panic-induced selling.
$1.7 billion in realized losses versus $605 million in realized gains
In a Quicktake post on the CryptoQuant platform, GugaOnChain shared that the Bitcoin market has been in a capitulation phase in recent days. This on-chain observation revolves around the Bitcoin Realized Profit and Loss ($) metric.
For context, this metric tracks the actual gains (in US dollars) and losses that investors realize (or retain) when they transfer their Bitcoin holdings to exchanges.
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GugaOnChain highlighted that market participants suffered approximately $1.705 billion worth of BTC in losses. On the other hand, a relatively smaller amount, totaling about $605 million, was reportedly realized.
Source: CryptoOnchainThis disproportionate distribution of losses compared to acquired profits brings the loss/profit ratio to 2.82. This means that for every dollar of profit made, almost $3 is lost.
Looking at the bigger picture, the analyst pointed out that 74% of the total realized volume leans towards the red side of the market, leaving only 26% of the Bitcoin market in profit. When realized losses mount rapidly to overcome gains, this is often interpreted as a sign of capitulation.
Historically, extreme capitulation events tend to set the pace for price recovery or even deeper downward movement. However, these two options remain dependent on the integrity of the available inflection points.
Bulls must defend these price levels or risk deeper corrections
While the market odds currently appear to be stacked against the bulls as the price adopts a bearish structure, the analyst has also identified a few key zones that could determine Bitcoin’s next direction. GugaOnChain explained that, in the scenario where the bulls continue to bleed, the next price level that offers a chance for redemption is around $71,450.
This specific price level is critical, as it represents the realized price for investors who have been purchasing Bitcoin for approximately 12 to 18 months.
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Citing a more extreme scenario, the online expert revealed that the next major support is at $58,940. This zone is important because it is the realized price for investors whose coins are within the 18 months to 2 years age range.
However, on the weekly time frame, price zones around $80,000 and $74,000 look significant enough for a near-term price recovery. A bullish reversal could occur if these price levels meet the current downturn with significant counterforce.
At the time of writing, Bitcoin is valued at around $89,331, reflecting no significant movement in the past 24 hours.
Featured image from iStock, chart from TradingView