Bitcoin Market Structure Echoes 2022 Bear Start, Glassnode Warns

On-chain analytics firm Glassnode has pointed out how the current Bitcoin market is reminiscent to the structure from the first quarter of 2022.

In its latest weekly report, Glassnode has discussed about how the broader Bitcoin market structure is starting to resemble Q1 2022. First, the analytics firm has shared the data of its Supply Quantiles Cost Basis Model, highlighting price levels that correspond to a certain degree of investor profitability.

In the chart, three supply quantiles are listed: 0.75, 0.85, and 0.95. If Bitcoin trades at the first of these levels, 75% of the supply will be in profit. Similarly, the latter two correspond to 85% and 95% profitability, respectively.

It’s visible in the graph that Bitcoin has recently fallen below all three of these levels, indicating more than 25% of the cryptocurrency’s supply is now underwater. “This creates a fragile balance between the risk of top-buyer capitulation and the potential for seller exhaustion to form a bottom,” explained Glassnode.

BTC similarly broke below the 0.75 quantile back during the sideways market of early 2022. Another indicator that reinforces the resemblance is the Total Supply in Loss, which measures, as its name suggests, the amount of the Bitcoin circulating supply that’s being held at some net unrealized loss.

Below is a chart showing the 7-day moving average (MA) trend in the metric.

As displayed in the graph, the 7-day MA Bitcoin Total Supply in Loss hit a high of 7.1 million BTC last week, which is the highest that it has been since September 2023, more than two years ago.

The analytics firm noted:

The current scale of supply in loss, ranging between 5M–7M BTC, is strikingly similar to the early-2022 sideways market, further reinforcing the resemblance noted above.

Finally, the Bitcoin long-term holder Spent Output Profit Ratio (SOPR) also implies that the current market structure is mirroring Q1 2022. This metric tells us, in short, whether the Bitcoin investors holding since more than 155 days ago are selling their coins at a profit or loss.

The Bitcoin long-term holder SOPR has witnessed a sharp decline recently, but its value is still above 1, indicating the long-term holders are selling at some net profit. With its current value of 1.43, however, there has been a notable shrinkage in the profit margins of the cohort.

It now remains to be seen whether the trends in these indicators mean that the cryptocurrency is on the cusp of a bear market transition like in early 2022, or if a rebound will come before long.

Bitcoin has seen a slight pullback during the past day as its price has dropped to $91,800.