Bitcoin has been having a bad time recently, but this analyst isn’t too worried about it, based on the recent trend in an on-chain indicator.
Bitcoin Unrealized losses have been low recently
The new post on X, on-chain analyst Checkmate talked about how the latest price action of the cryptocurrency isn’t too scary when considering the trend in the Unrealized Loss.
It is important to note that the word “you” means “you”. “Unrealized Loss”This is an indicator on the blockchain that tracks the current total amount of loss held by all addresses in the Bitcoin network.
The metric is calculated by looking at the last price that a coin was sold for. This metric works by looking at the transaction history of each coin in circulation to see what price it was last traded at.
This cost basis can also be higher than current cryptocurrency spot prices. If so, the coin in question is considered to have a unrealized net loss.
Unrealized Loss calculates each coin’s loss by subtracting two values, and then adding the sums. The opposite coin type will contribute. “Unrealized Profit”Instead of metric, use the word “metric”
In the context of the current discussion, the Unrealized Loss itself isn’t of interest, but rather a normalized form called the Relative Unrealized Loss. This metric divides the Unrealized Loss by the asset’s market cap.
Below is a chart showing this Bitcoin indicator’s trend over the past decade or so.
According to the graph, Bitcoin Relative Lost was at its highest during the lows of the November 2022 Bear Market and is now heading downward. Recently, the metric’s value has been close to zero, implying the losses in the market have only been equal to a negligible percentage of the market cap.
These low prices are due to the recent surge in price towards new all-time high (ATH). During ATH breaks the whole supply becomes profitable, and so Unrealized Losses shrink to zero.
The indicator also dropped to zero in early 2014 when the ATH was reached, but since then the price has been falling and some investors are now back at a loss.
Interestingly, though, the indicator’s value has still been extremely low, implying that while some buying has occurred at the higher prices, it hasn’t been excessive.
From the chart, it’s visible that spikes followed bull market tops in the past in the indicator, as only a small drop was enough to put all the latecomers chasing hype into a loss. That hasn’t been the case in the current cycle so far.
“It is hard for me to be too scared of Bitcoin price action when unrealized losses look like this,”Checkmate notes. The analyst also cautions that it could deteriorate from here, but it hasn’t happened yet.
BTC price
Bitcoin’s recent downward trend has continued in the last day, with its current price at $64,500.
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Source: www.newsbtc.com