This Bitcoin Bear Confirmation Is Yet To Appear, Glassnode Reveals

The on-chain analytics firm Glassnode has revealed in a report how this historical bear market confirmation is yet to appear for Bitcoin in the current cycle.

In its latest weekly report, Glassnode has discussed about the trend in the Unrealized Loss for the two major Bitcoin cohorts. The “Unrealized Loss” is an on-chain indicator that measures the total amount of loss that the BTC addresses as a whole are carrying.

The metric works by going through the transfer history of each coin in circulation to see what price it was last moved at. If this previous trading price is more than the current spot price for any token, then that particular token’s assumed to be holding a net loss.

The indicator takes the difference between the two prices to find the exact measure of this loss. It then adds up this value for all coins part of the circulating supply to find the network total.

In the context of the current topic, the usual version of the Unrealized Loss isn’t the one of interest, but rather a new variant known as the Unrealized Loss per Percent Drawdown. As the analytics firm explains,

As the market continues to contract, it’s reasonable to expect the absolute size of unrealized losses to grow. To account for this and normalize across drawdowns of varying magnitudes, we introduce a new variant of the metric: Unrealized Loss per Percent Drawdown, which expresses losses held in BTC terms relative to the percentage decline from the all-time high.

First, here is a chart that shows the trend in this Bitcoin indicator specifically for the short-term holders:

“Short-term holders” (STHs) refer to the Bitcoin investors who purchased their coins within the past 155 days. BTC is currently trading under the levels that it was at during most of this window, so these holders would majorly be in a state of loss.

The Unrealized Loss per Percent Drawdown showcases this trend, as its value has shot up recently. Interestingly, the indicator is already at a high-enough level to be comparable with values seen during the start of previous bear markets.

While the STHs are in substantial losses, the same isn’t true for the other side of the market: the “long-term holders” (LTHs).

These investors, who have been holding onto their coins since more than 155 days ago, are carrying no unrealized loss at all right now. In the past, the LTHs have generally seen their loss spike up during the transition to a bear market.

As the report notes,

Historically, substantial expansions in unrealized losses among long-term holders have often marked the confirmation of bear market conditions, albeit with a delay following the market peak.

So far, this signal hasn’t appeared for Bitcoin. Something to keep in mind, though, is the fact that the top buyers will soon promote into the LTHs. Once that happens, the loss among the group is probable to register an increase.

Bitcoin has seen a pause in the recovery rally as its price has taken to sideways movement around $85,000.