The below is from a recent issue of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. Sign up now to be one of the first to get these insights and other on-chain bitcoin market analysis delivered straight to your inbox. In today’s daily dive we cover the state of realized losses and gains in the market and an update on the derivatives markets. How much more loss can the market take if the price of bitcoin falls and is there more short-term downside? This past week we have seen a rising level of realized losses in the chain during the latest price drop. During bitcoin’s declines over the past six months, realized losses of more than $1 billion on a 7-day moving average have been a consistent ceiling for each new sell-off. In May, realized losses reached more than $2 billion, the highest level in the past five years, caused by severe derivative liquidations. Source: Glassnode But as a percentage of bitcoin’s market cap, the latest round of realized losses and sales is relatively small to market capitulation we’ve seen before.Source: Glassnode Historically, the net unrealized gain/loss ratio (NUPL) has been a useful indicator to indicate when the market is in complete capitulation and has bottomed out. As a refresher, NUPL is calculated as (Market Cap – Realized Cap) / Market Cap. Currently, the overall market appears to be neutral, but historically we have followed every rise in the NUPL by a major capitulation period. These periods bring the market back to (and even below) the market’s cost base.
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