Analysis of on-chain metrics suggests Bitcoin is firmly in capitulation phase

Hull Invest

On-chain data provided and analyzed by Glassnode shows that since June, Bitcoin (BTC) and subsequently the general market have capitulated, aside from the few gains seen during this ongoing bear market summer. doing. crypto slate.

Both bull and bear markets reveal on-chain sentiment data ranging from “surrender” to “euphoria – greed”. The height of the bull market historically shows the top when Euphoria holds tight. Surrender, on the other hand, usually marks the bottom.

surrender in progress

Chart below shows BTC firmly sunk in surrender sentiment as Unrealized Net Gain/Loss (NUPL) on-chain data, seen only in 2012, 2015 and 2019, shows a descent into red territory. It shows that


Bitcoin: Declining Circulating Supply

Bitcoin: The Percent Supply of Profit (7-day moving average) metric currently shows that only 54% of BTC’s circulating supply was last moved on-chain for profit. With the collapse of FTX, this indicator shows that the circulating supply of BTC has fallen below 50%. This is a level that has only occurred during bear market lows.


Bitcoin: Overvalued or Undervalued?

Analysis of the MVRV Z-score (7-day moving average) metric reveals that it is already over 170 days below the realized price.

Bitcoin has beaten its realized price as a result of a bear market rally, but past bear markets below its realized price suggest further capitulations are possible.

Previous Bear Markets:

  • 2019-20: 134 days below realization price
  • 2015-16: 384 days below realization price
  • 2011-12: 215 days below realization price

Summarizing all indicators covered in this analysis, the analyzed market bottom indications are consistent with other bear market cycles. However, when this bear market is measured against previous bear markets, it could easily be below realized prices for another 6 months to 1 year.

Geopolitical challenges, macro uncertainty and headwinds add to the fact that bottoming out at such an unprecedented time can remain an educated guess.

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