Bitcoin wealth is spreading from a weak hand to a strong hand due to the constant capitulation of retail investors and miners, signaling that the bottom may be near.
Latest ‘The Week On-Chain’ report from blockchain analysis company Glassnode on July 11 explains that market capitulation has been underway for about a month and several other signals suggest a lower formation in the Bitcoin price.
However, Glassnode analysts write that the bear market “still needs an element of duration” as Long -Term Holders (LTHs), who tend to have greater confidence in Bitcoin as a technology, add many unrealizable losses.
“For the bear market to reach its highest level, a portion of the coins held at a loss must be transferred primarily to those who are most sensitive to price, and with the highest confidence.”
He added that the market may need “downside risk to try to decide investors, and allow the market to build a resilient foundation.”
An unrealized loss is a loss in dollar value from a position you had before it was sold.
Glassnode made this assessment based on the observation that in previous bear markets in 2015 and 2018, LTH held 34% of it Bitcoin (BTC) the inventory is at an unrealized loss. The proportion of STH is only 3% to 4%.
Currently, Short-Term Holders (STH) hold 16.2% of the coins at a loss, while LTH holds 28.5%. The coins moved to a new STH that sparked speculation about the price but was less confident about the asset, he added.
This means that when LTH makes more money, they have to have a diamond hand, meaning they don’t have to sell, so that analysts can understand the true market fundamentals. Cointelegraph echoed this idea acknowledges that Delphi Digital also believes that more time is needed in current market conditions to mention this below.
Bitcoin miners who sell coins are proof that the market can test the lower range. Glassnode shows that the miners have sold 7,900 BTC since the end of May but recently spent spending up to about 1,350 BTC per month.
Duration is again highlighted as a critical factor in determining where the market bottom can be. During the 2018-2019 bear market, miners ’capitulation will take four months to mark the bottom; they have just been selling in 2022 is about a month or two. The miners still hold about 66,900 BTC, so “the next quarter will remain a risk of further distribution unless the coin price recovers significantly,” the report concluded.
Overall, Glassnode noted that the market looks close to the bottom, noting that it “has a lot of characteristics in the late stages of a bear market” but investors need to know that more pain can be saved.
“Overall, the fingerprints of widespread capitulation and extreme financial stress are certainly there.”
Bitcoin is down 3% over the past 24 hours, down below $ 20,000 to $ 19,939, according to to CoinGecko.