This month, more holders have given up than at almost any other time in Bitcoin’s history.
On-chain analytics company Glassnode’s data confirms that the BTC sell-off in November 2022 was the fourth largest ever.
Bitcoin investors are expecting multibillion-dollar losses.
In the most recent issue of its weekly newsletter, “The Week On-Chain,” Glassnode talked about how the FTX scandal affected BTC investors.
Related: Bitcoin’s (BTC) weekly trend continues with a 24-hour gain.
It shows that the results have been mixed. On the one hand, a big loss of confidence led to funds being sold at a loss, while on the other hand, there has been “strong accumulation.”
But for those who have tried to get into Bitcoin in the past few years, life has been anything but easy.
“A dramatic realization of losses, as many investors give up and capitulate, is a consistent event that drives the change from a bear market back to a bull market,” Glassnode said.
“November saw the fourth biggest capitulation event on record, with a 7-day realized loss of -$10.16B. “This is four times as big as the peak in December 2018 and two and a half times as big as March 2020.”
annotated chart of Bitcoin’s loss over the past seven days (screenshot). From Glassnode
Even though the dollar value capitulation can be explained by the fact that BTC/USD is trading five times higher than it was in late 2018 and 4.5 times higher than it was in March 2020, it is no secret that crypto markets have been cold since FTX went down.
That right after the event, holders were sitting on 50% of the BTC supply at a loss they had not yet realized.
Glassnode talked about Bitcoin’s adjusted market-value-to-realized-value (MVRV) ratio, which shows that coins moving on-chain are returning to loss-making levels that have rarely been seen before. This is what the Glass node calls “peak under-performance.”
The adjusted MVRV ratio is the relationship between bitcoin’s market value and its realized value, less the profit impact of coins that haven’t been used in seven years or more.
“This metric is currently giving a value of 0.63, which is very important because only 1.57% of trading days in the history of bitcoin have had a lower adjusted MVRV value,” the newsletter said.
“In other words, if we take into account the profit held across the presumably lost supply, the current market is the most underwater it has been since December 2018 and January 2015.
Bitcoin changed the MVRV ratio chart with notes (screenshot). From Glassnode
Buying the dip like it’s December 2018 Despite this, “The Week on Chain” has some good news for people in the market.
Even though holders lost money in the past, they have been buying bitcoin aggressively since then. This is true for everyone, from the smallest “shrimps” to the biggest “whales.”
“From a comparative point of view, the recent strong accumulation score after the recent sell-off is similar to that of late 2018,” Glassnode said.
Related: Glassnode says that crabs and shrimp are buying more bitcoin.
It was also said that investors reacted the same way to similar black swan events in Bitcoin’s past as well as recent ones like the collapse of Terra’s LUNA.
The seven-day moving average (MA) of the Accumulation Trend Score, which was shown on a chart, showed that the current situation was purple, which is a sign of mass accumulation. Yellow, on the other hand, means that there are a lot of BTC on the market.
