Bitcoin is in for a second panic sell-off following the digital asset’s 50% collapse from its all-time high of $64,802, according to data from analytics firm Glassnode.
In its weekly newsletter, the crypto data analytics firm noted that Bitcoin’s recent market crash has overtaken that of the cryptocurrency’s other catastrophic events including March 2020, Nov 2018, and the exploding sell-offs during the last bull run in January and February 2018.
Taking a look at the number of unrealized losses on the market, Glassnode contemplates whether those losing positions would be sold once Bitcoin goes for another rally.
“A major question that remains is what is the magnitude of unrealized losses, or in other words, how many underwater coins could still panic sell out? We inspect the Relative Unrealised Losses metric which presents the ratio between total underwater value and the current market cap.”
Glassnode notes that the Net Unrealized Profit/Loss (NUPL) metric that determines whether the Bitcoin market is in a state of profit or loss, fell below the 0.5 level, suggesting only half of Bitcoin’s market cap is in in the green zone.
Previously, the 0.5 NUPL area has acted as support in previous bull runs, with the 2017 cycle hitting four times before the peak. At the same time, in the 2021 bull market, the latest correction marked the first time Bitcoin has reached 0.5 points.
Amid the digital asset's recent market crash, Glassnode notes that short-term holders were the ones to hit the hardest:
“Short-term holders currently hold an aggregate unrealised loss of -33.8% of the market cap on their coins. This compares only to the most extreme drawdowns in Bitcoin history including, The first Bull top in 2013, Three events in the 2014-15 bear, Four events in the 2018 bear March 2020 capitulation.”
Bitcoin reached a peak of over $63,000 in April this year but has fallen dramatically since then. Earlier last week, the cryptocurrency dropped to $33,650, its lowest point since early February, and a 47% drop from its recent high. The price has risen slightly this week and at the time of writing it currently sits at $38,895.