Hard To Be “Too Scared Of Bitcoin Price Action,” Says Analyst. Here’s Why
Bitcoin has been having a bad time recently, but this analyst isn’t too worried about it, based on the recent trend in an on-chain indicator. Bitcoin Unrealized Loss Has Been At Low Levels Recently In a new post on X, on-chain analyst Checkmate talked about how the latest price action of the cryptocurrency isn’t too scary when considering the trend in the Unrealized Loss. The “Unrealized Loss” here refers to an on-chain indicator that keeps track of the total loss that addresses across the Bitcoin network are holding right now. This metric works by going through the transaction history of each coin in circulation to see what price it was last moved at. Assuming that this latest transaction was the last point at which the coin changed hands, the price at its time would reflect its current cost basis. If this cost basis is higher than the current spot price of the cryptocurrency for any coin, then that particular coin can be considered to hold a net unrealized loss currently. The Unrealized Loss subtracts the two values to calculate the magnitude of loss for every coin and then sums them up. Naturally, coins of the opposite type contribute towards the “Unrealized Profit” metric instead. In the context of the current discussion, the Unrealized Loss itself isn’t of interest, but rather a normalized form called the Relative Unrealized Loss. This metric divides the Unrealized Loss by the asset’s market cap. Below is a chart showing this Bitcoin indicator’s trend over the past decade or so. The value of the metric seems to have been quite low in recent months | Source: @_Checkmatey_ on XAs is visible in the graph, the Bitcoin Relative Unrealized Loss peaked during the November 2022 bear market lows and has since been heading down. Recently, the metric’s value has been close to zero, implying the losses in the market have only been equal to a negligible percentage of the market cap. The reason behind these lows is the recent price surge towards the new all-time high (ATH). The entire supply becomes profitable during ATH breaks, so the Unrealized Loss shrinks to zero. The indicator naturally also fell to zero earlier in the year when the ATH took place, but the bearish price action since then has meant that some of the investors have gone back into losses. Interestingly, though, the indicator’s value has still been extremely low, implying that while some buying has occurred at the higher prices, it hasn’t been excessive. From the chart, it’s visible that spikes followed bull market tops in the past in the indicator, as only a small drop was enough to put all the latecomers chasing hype into a loss. That hasn’t been the case in the current cycle so far. “It is hard for me to be too scared of Bitcoin price action when unrealized losses look like this,” notes Checkmate. The analyst also cautions that it could deteriorate from here, but it hasn’t happened yet. BTC Price Bitcoin has continued its recent bearish momentum during the past day as its price has now slipped to $64,500. The price of the asset appears to have been heading down over the past few days | Source: BTCUSD on TradingViewFeatured image from Dall-E, checkonchain.com, chart from TradingView.com Keshav Verma Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021. Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to. In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions. Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true. Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment.. Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form. Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new. As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money. Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs. Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body. Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.