Bitcoin (BTC) hodlers may need to triple their on-chain losses for the BTC price to hit a macro low.
According to According to market research firm Baro Virtual, the 2022 bear market is not yet tough enough to match historical downtrends.
Bitcoin losses “alone” add up to $671 million
With analysts predicting a return to $14,000 or below for BTC/USD, the question of where Bitcoin will bottom is one of the hottest topics in the space this month.
For Baro Virtual, which analyzed data from on-chain analytics platform Whalemap, it may be a matter of simple arithmetic.
Taking Whalemap’s moving profit and loss (MPL) figures for on-chain BTC transactions, he noted that in the past, macro BTC prices occurred once losses from those transactions were equal to or greater than equivalent gains on the run. bullish that preceded them.
In other words, the losses on the chain must equal or exceed the gains on the chain from the previous bull run. Otherwise, in most cases, Bitcoin has gone down further.
“Whalemap monthly MPL makes it almost certain, in most cases, to determine the global USD/BTC bottom,” Baro Virtual wrote in Twitter comments on Nov. 22:
“The condition is that the current loss level must be equal to or higher than the maximum profit level of the previous bull run.”
Therefore, the current realized losses are not large enough to accommodate Bitcoin’s historical capitulation trend, he argued, leaving the door open for further BTC price capitulation.
However, the amount needed could mean that the ultimate macro bottom for Bitcoin is well below this week’s two-year low of $15,480.
“Currently the losses are $671 million, and the previous maximum profit is $1.3 billion to $1.7 billion,” the thread continued along with an annotated chart:
“Therefore, losses of $629 million to $1.029 billion are still missing to confirm full capitulation.”
BTC Targets 80% Retracement
The findings complement a narrative that also suggests the 2022 bear market has yet to rival 2014 and 2018, years that saw macroeconomic lows in Bitcoin’s two previous halving cycles.
Compared to the last all-time high in November 2021, BTC/USD has so far achieved a 77% drawdown, less than in previous bear markets.
Nonetheless, data from on-chain analytics firm Glassnode shows how Bitcoin is gradually approaching a retest of all-time high losses.
Similarly, the percentage of total BTC that is currently holding in gains is almost, but not quite, at lows, synonymous with macro funds.
“Bitcoin’s 78% decline over the past year is the largest since 2017-18 and, at 376 days, is now the second longest, second only to the 410-day decline from 2013-15,” Charlie Bilello, Founder and CEO of Compound Capital Advisors, also he pointed this week.
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