Bitcoin Reserve Risk Indicator Falls to All-Time Lows

Updated by Kyle Baird
In Brief
  • Longer-term holder confidence is at rock bottom.
  • BTC prices have fallen below realized price again.
  • Negative macro factors could spell further losses this month.
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Another key technical indicator for the Bitcoin network has tanked to its lowest ever levels as the asset shows few signs of recovering any time soon.

The Bitcoin Reserve Risk indicator has declined to all-time lows according to on-chain analysis from Glassnode.

The indicator follows market cycles tracking the risk-reward balance relative to the confidence and conviction of long-term holders.

At current levels, even the confidence of hardened holders appears to be faltering as it has not been this low since the 2015 bear market. Even during the 2018 bear market and December capitulation event, this indicator didn’t fall to the levels at this moment.

The metric was noted by popular crypto analyst ‘Murad’ who posted it on July 10 commenting that “either this indicator is broken or we are in the high timeframe bottoming zone.”

Is Bitcoin capitulating yet?

Bitcoin markets have never been through a recession yet and one may be declared later this month following two-quarters of negative GDP figures in the United States.

Other metrics such as the long-term Spent Output Profit Ratio (SOPR) have also tanked to lows not seen for several years. This indicator measures the realized value divided by the value at the creation of a spent output. In other words, the price sold divided by the price purchased.

According to the chart, longer-term holders are still selling even at a loss which suggests the capitulation is currently occurring.

Prices have been range-bound for the past three weeks or so, oscillating between the high $18,000 zone and low $22,000 zone where its realized price, or aggregate cost basis of the supply, sits.

A major capitulation event is likely to send prices down to around $12,000 which would be an 82%+ drawdown similar to those observed in the previous two bear markets.

This could be catalyzed by a number of negative macroeconomic announcements this month including the U.S. consumer price index (CPI) or inflation, further Fed hikes in interest rates, or the onset of a technical recession.

Crypto markets retreat again

Weekend gains had largely been wiped out by the time the Monday morning Asian trading session was underway.

At the time of writing, total market capitalization was down to $953 billion following a 3% loss on the day. The market cap topped a trillion dollars briefly on Saturday when BTC made it to $21,850 but those gains could not be built upon.

Bitcoin is currently trading at $20,574 after a 3.3% daily loss and Ethereum was down 3.1% to $1,153 at the time of press.

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