Bitcoin realized and unrealized losses at record-highs

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Written by

Kevin Lopez
Published on

November 29, 2022


Key points: 

  • Bitcoin’s seven-day realized loss in November was $10.8 billion.
  • Unrealized losses have recently peaked at 56%, which is the highest for this cycle, and comparable to prior bear market floors.
  • Bitcoin miners are struggling to stay profitable, this is affecting the BTC mining hash rate, the block time reached 11 minutes and above.
  • Despite the current challenges, Glassnode analysts see the capitulation as beneficial to start the next bull market.

With three weeks to go until the FTX crash, bitcoin analysts are combing through data to determine whether further selling will continue, or whether a bear market bottom has been reached.

The one thing miners, short-term and long-term holders have in common is that they are losing money in the Bitcoin market right now.

According to Glassnode’s on-chain analysis, the scale of realized and unrealized losses among Bitcoin holders is one of the worst capitulation events in BTC’s history. Capitulation saves all groups from mounting bankruptcies and loss of miner revenue.

Bitcoin’s Realized Loss Is Fourth Largest On Record While Unrealized Losses Are Mounting

Bitcoin’s seven-day realized loss in November was $10.8 billion. The largest realized loss in Bitcoin history occurred in June 2022, when $19.8 billion was recorded. This loss indicates that a large number of bitcoins are changing hands at a discount.

Bitcoin realized 7-day losses. Source: Glassnode

Bitcoin realized 7-day losses. Source: Glassnode

A popular saying about cryptocurrency investing is, “You can’t lose money if you don’t sell it.” Unrealized losses track the overall Bitcoin market versus total market capitalization. The 56% unrealized loss in November 2022 is the largest in the current bear market. In 2014-2015, the unrealized losses of Bitcoin holders reached an all-time high of 86%. The current unrealized loss is the fourth largest in Bitcoin history.

According to Glassnode analysts:

“This metric has recently peaked at 56%, which is the highest for this cycle, and comparable to prior bear market floors.”

Bitcoin unrealized losses 7-day moving average. Source: Glassnode

Bitcoin unrealized losses 7-day moving average. Source: Glassnode

Block times slacken as Bitcoin miners struggle

Bitcoin investors aren't the only ones bowing down in the current market. Bitcoin miners are struggling to stay profitable amid depressed prices.

Charles Tweet

This is affecting the BTC mining hash rate as Bitcoin miners are under pressure to remain financially viable. A drop in Bitcoin's hash rate slows down BTC transactions. According to HashRate Index, the block time reached 11 minutes and above.

Hashrate Index Tweet

Despite the current challenges, analysts see the capitulation as beneficial to start the next bull market. Glassnode notes:

“One consistent event which motivates the transition from a bear back towards a bull market is the dramatic realization of losses, as investors give up and capitulate at scale.”

With so many groups currently in the red at this stage of the bear market following the FTX crash, Bitcoin and broader market sentiment need to improve to spur new money into the bull market. Capitulation may not be in line with previous Bitcoin cycles if sentiment does not improve.

 


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