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Bitcoin Worse As BTC Hodlers Lose $10 Billion In One Week

 


Data from on-chain analytics firm Glassnode confirms that November 2022 saw the fourth-biggest BTC sale ever.


Bitcoin investors see billions in losses

In the current edition of the weekly newsletter "The Week On-Chain", Glassnode has dealt with the impact of the FTX situation on BTC investors.


The mixed results: on the one hand, a major loss of confidence has led to loss-making outflows of funds, on the other hand, there has also been "strong accumulation".


However, it is a tough time for people getting into BTC in the current conditions.


"One event that almost always drives the transition from a bear market back to a bull market is the dramatic realization of losses as investors give up and capitulate on a large scale," Glassnode explained.


“November saw its fourth-largest capitulation ever with a 7-day loss of $10.16 billion, four times larger than the December 2018 peak and 2.2 times larger than March 2020."

The dollar capitulation can be explained by BTC/USD being five times higher than at the end of 2018 and 4.5 times higher than in March 2020. However, it is also clear that the crypto market has become scared since the collapse of FTX .


As Cointelegraph reported, hodlers held 50 percent of BTC supply with an unrealized loss right after the event .


Glassnode referred to Bitcoin’s Adjusted Market Value to Realized Value (MVRV) ratio. This indicator shows that coins moving on-chain are reaching loss levels rarely seen before. Glassnode describes this as "peak under-performance", i.e. a peak for poor development.


The so-called Adjusted MVRV ratio is the ratio between the market value of BTC and its realized value, minus the earnings impact of coins that have been dormant for seven years or more.


“This indicator is currently showing a reading of 0.63 (average unrealized loss of 37 percent). This is quite significant given that only 1.57 percent of trading days in Bitcoin history have had a lower Adjusted MVRV value.” it says in the newsletter.


"In other words, if we subtract the profits held by the probable lost supply, the market is currently the lowest it has been since the pico bottoms in December 2018 and January 2015."

Despite the previous losses, the hodlers have been aggressively buying up BTC ever since. These purchases came from all group sizes, from the smallest "shrimp" to the largest whales .


"By comparison, the strong recent accumulation following the recent sell-off is similar to that seen in late 2018," Glassnode said.


He added that similar black swans in Bitcoin's past, including recent events like the collapse of Terra, have prompted similar investor reactions.


In a chart of this, you can see that the seven-day moving average (MA) of the Accumulation Trend Score represents the current conditions in purple. That signals mass accumulation. Yellow, on the other hand, indicates a mass distribution of BTC in the market.

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