Bitcoin far removed from capitulation according to on-chain data

The Bitcoin market is not yet showing signs of capitulation. On an annual basis, holders are now realizing a net loss of 136,000 Bitcoin, but that pales in comparison to the losses recorded in earlier market cycles. The question is whether this means the current downturn will remain relatively mild, or whether a significant correction is still on the way.

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In brief:

• Bitcoin holders are realizing an annual loss of 136,000 BTC, a fraction of the losses seen in previous cycles.
• At earlier market bottoms, realized losses stood at 1.3 and 3.7 million Bitcoin, respectively.
• It is unclear whether the current cycle is fundamentally different or whether there is more room to the downside.

Realized losses still far from historical bottoms

Analyst jjcmoreno shares a chart from CryptoQuant showing that Bitcoin holders have only just begun realizing losses on an annual basis. The figure concerns a negative balance of 136,000 Bitcoin on the so-called Net Realized Profit/Loss indicator, measured over a twelve-month period.

By comparison, during the 2019 market bottom, annual realized losses ran to around 1.3 million Bitcoin. In the bear market of 2022 and early 2023, that figure reached a trough of roughly 3.7 million Bitcoin. The current level of 136,000 BTC is therefore a fraction of what was seen in those periods.

Mildest cycle ever or more decline ahead?

The analyst offers two possible explanations. Either this is the most moderate cycle the Bitcoin market has ever experienced in terms of realized losses, or there is still room for further decline before a true bottom is reached. Capitulation, in which large groups of holders sell at a loss, is not currently visible in the data.

The Bitcoin price stands at $63K at the time of writing, down 2.7% over the past 24 hours. Earlier this month, Bitcoin rose above $65.000, but since then the price has pulled back somewhat. Spot volume in July also fell to its lowest level since November 2023, pointing to limited market activity. Whether the current cycle will indeed prove milder than its predecessors remains an open question for now.