Bitcoin (BTC) near $20,000 has the market worried, but after narrowly avoiding breaking support, is the worst really over?
According to several on-chain indicators, it seems that peak pain has not yet arrived this cycle.
The stakes are high for many hodlers this week – nearly 50% of supply is being held at a loss and miners are increasing their shipments of BTC to exchanges.
Even some of Bitcoin’s biggest investors, including MicroStrategy, have to defend their belief on BTC as prices fall.
With targets ranging as low as $11,000, Cointelegraph examines how far the market must technically drop to match historical lows.
Weak hodlers still need to be flushed out
Despite falling to eighteen-month lows, Bitcoin’s price action has yet to shake all its speculators. According to the RHODL ratio from Philip Swift, creator of on-chain analytics resource LookIntoBitcoin, more capitulation should be on the way.
Indeed, historically, the ratio between short-term and long-term hodlers has been more in favor of the latter at macro price lows.
RHODL specifically takes the ratio of one-week cohorts to one- to two-year cohorts from the Realized Cap HODL Waves metric, which divides coins by their last move (weighted by realized price).
Essentially, once the green zone of RHODL is there, it suggests that the capitulation is at its peak and a price floor is imminent or already in the process of setting. So far, RHODL has yet to enter its green zone, according to data from on-chain analytics firm Glassnode.
Not enough hodlers are underwater
It can feel like the entire Bitcoin market is at a loss, but above $20,000 many are still holding on to what are likely meager gains, hoping for a rebound.
On-chain analytics platform CryptoQuant reveals that as of June 16, only 46% of total BTC supply was held at a loss.
That’s impressive as a statistic on its own, but not enough to call a macro capitulation event if historical patterns are considered.
According to data from CryptoQuant, at least 60% of supply must generate unrealized losses before it can qualify as a capitulation – as was the case in March 2020, late 2018 and before.
Ki Young Ju, CEO of CryptoQuant Noted the significance of BTC/USD returning to its realized price last week. This event, which has lasted for two years, means that the spot price goes below the average price at which all coins were last moved.
“I’ve been waiting for this moment for 2 years since the big clearance sale in March 2020,” he commented at the time.
No surrender for miners despite “impressive” trade flows
Although their cost of production is likely closer to $30,000 than $20,000, Bitcoin miners have yet to start covering their expenses with sales of hoarded BTC. Coins are moving to exchanges, however, at the fastest pace in seven months, Cointelegraph recently reported.
Related: $30,000 BTC Price Has a “Major Impact” on Bitcoin Miner Profits
As such, the Bitcoin network hash rate has yet to take a serious dive, which is common during times of high price pressure.
The Hash Ribbons metric, created by the CEO of asset manager Capriole, Charles Edwards, confirms the lack of a trend.
Hash tapes use the 30-day and 60-day moving average of the hash rate to determine when miner capitulation occurs. Once the rising 30 days exceeds 60 days, presumably the “worst” is over when miners return to work.
So far, this crossover has yet to happen, and historically that means the peak pain could be yet to come.
“Impressive bitcoin miner exchange flows,” said economist, trader and entrepreneur Max Krueger. commented about miner activity this week:
“Many miners would have big problems with $BTC as teenagers, panicking yesterday in anticipation of the 20,000 breakout makes sense.”
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