Data shows Bitcoin top buyers have already capitulated, new bull rally here?


Data on the chain suggests that Bitcoin buyers who have come in at the top may have already capitulated. The last time such a trend occurred was in July 2021, after which another bull rally occurred.

Bitcoin’s Moderate Sales Recently May Suggest Top Buyers Have Already Capitulated

According to the latest weekly report from glass nodethere has been no significant loss recently despite world-changing events that have taken place this week.

The relevant on-chain indicator here is the “net realized gain/loss”, which tells us whether the overall Bitcoin market is currently making gains or losses.

The metric works by looking at each coin on the blockchain to see what price it last moved at. If this price is lower than the current price (i.e. the selling price), then the coin will be sold at a profit. Investors who make a lot of profit generally lead to a price correction.

On the other hand, a higher purchase price than the current one would mean a realization of loss. The Bitcoin market seeing a significant number of losses being realized could be a sign of widespread capitulation.

Here is a chart showing the trend in BTC net realized gain/loss over the past year:

The value of the indicator seems to have been slightly negative recently | Source: Glassnode’s The Week Onchain – Week 9, 2022

As you can see in the chart above, it appears that a net loss has been realized recently. However, despite the massive bearish event that is the war between Russia and Ukraine this week, the magnitude of these losses is quite small.

Usually, during such events, capitulation occurs in the market where a huge negative spike in the indicator is observed.

Related literature | Despite Struggling Price, Bitcoin Exchange Reserve Hits Lowest Value Since September 2018

The lack of such a spike could be a sign that those who bought Bitcoin at the top had already dumped their Bitcoin during the two capitulation events that preceded it.

The report also highlighted a similarity in the chart between the current trend and that during the May-July mini-bear period.

Related literature | Battle Of The Hedges: How Gold And Bitcoin Have Performed With The Russia-Ukraine Conflict

Before the rally started, it seems there were three negative spikes then, and the third was much smaller in size. This trend is similar to now.

If there is a pattern here, the current third spike would mean another Bitcoin bull rally is about to begin.

BTC price

At the time of writing, Bitcoin’s price is hovering around $43.5k, up 15% from the past week.

It looks like Bitcoin price has risen sharply in the past day | Source: BTCUSD on TradingView
Featured image from Unsplash.com, Charts from TradingView.com, Glassnode.com

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