Traders think Bitcoin bottomed, but on-chain metrics point to one more capitulation event


Bull market enthusiasm has driven prices to new highs throughout 2021, giving way to bear market gloom for any bitcoin (BTC) buyer who has been buying since January 1, 2021. Data from Glassnode shows that these buyers are “under water now” and the market is gearing up for an eventual surrender program.

Bitcoin net unrealized gain/loss. Source: Glassnode

As seen in the graphic above, NUPL, a metric that is a measure of the network’s overall unrealized gains and losses as a ratio of market cap, shows that “less than 25% of market cap is in profit.” placed, “which resembles a market structure comparable to the pre-capitulation phases in previous bear markets.”


Based on previous capitulation events, if a similar move occurs at current levels, bitcoin price could drop in a price range of $20,560 to $25,700 in a “full-scale capitulation scenario.”

the market is looking down

With the crypto market clearly trading in bear market territory, the question on everyone’s mind is “Where’s the bottom?”

One metric that can help provide some potential guidance is the Meyer multiple, an oscillator that tracks the ratio between price and the 200-day moving average.

Meyer Multiple Model for Bitcoin. Source: Glassnode

According to Glassnode, in past bear markets, “oversold or undervalued conditions coincided with a fall of the Meyer multiple in the range of 0.6-0.8”, and this is precisely the range where bitcoin now finds itself.

Based on price action from past bear markets, bitcoin’s recent trading range is between $25,200 and $33,700 with the B phase of the previous bear cycle and could mark BTC’s low in the current cycle.

The bitcoin realized price model also provides insight into what could be a potential price bottom for bitcoin, with current readings provided by bitcoin data provider Lookintobitcoin, with the actual price for BTC as of June 5 at $23,601.

Realized the price of bitcoin. Source: View in bitcoin

The combination of these two metrics suggests that BTC bottoms may lie between $23,600 and $25,200.

related: Amid Crypto Bear Market, Institutional Investors Raise Bitcoin: CoinShares

Short term holder and minor capitulation

The selloff in the current market conditions has mainly been dominated by short-term holders, as seen during the last two extended bear markets, where long-term holders held more than 90% of the market gain.

Long-term bitcoin holders share in the profits from the supply. Source: Glassnode

The recent drop below $30,000 for bitcoin saw the percentage of supply rise above 90% in gains for the long-term holder group, indicating that short-term holders “essentially approaching the extreme pain threshold”. went.”

According to Glassnode, miners have also been net sellers in recent months as the decline in BTC hindered profitability for miners resulting in “a reduction in total miner balances between 5k and 8k BTC per month.”

Change in the net position of the bitcoin miner. Source: Glassnode

Should the price of BTC continue to fall from here, there is no question of the potential for an increase in miners’ dedication, as demonstrated in the past by the Puell Multiple, which is a 365 to 365 daily issuance value of bitcoin. . The day’s moving average of this price.

Pull Multiple Vs BTC Price. Source: View in bitcoin

Historical data shows that the metric has fallen into the sub-0.5 area during the late phases of previous bear markets, which has not yet happened during the current cycle. Depending on current market conditions, an additional 10% drop in BTC price could lead to an eventual miner capitulation event that would be similar to the price drop and selloff seen at the height of previous bear markets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, so you should do your own research when making a decision.