On-Chain Analysis: Realized Loss of BTC Investors Reaches New ATH

During the past week, Bitcoin investors decided to sell their coins with the biggest loss in history. BeInCrypto takes a look at on-chain indicators, according to which the last 6 days led to a loss of $19.121 billion in Bitcoin.

The avalanche of selling was first triggered by the loss of support in the $28,000 area, which occurred on June 12 (blue arrow). A day later, a very large red candle with a body reaching over -15% was printed.

This was followed by Bitcoin’s unprecedented drop below the previous 2016-2017 cycle peak at $20,000 on June 18 (orange arrow).

BTC chart by Tradingview

These dynamic downward movements took place at a relatively high volume. This signals that many coins have changed hands in this range. Moreover, the move happened after a 33-day consolidation in the $28,000-$32,000 range. This area will now likely act as resistance.

Realized Loss reaches new ATH

Realized Loss is an indicator that represents the total loss (expressed in USD) of all moved coins whose price at the last move was higher than the price at their current move.

The June 13-18 price action described above drove the realized loss ratio to a record high. The total loss that investors suffered when deciding to sell their coins bought at higher prices was $19.121 billion for the last 6-day period (blue area).

These are magnitudes of loss, measured in USD, that Bitcoin investors and traders have never experienced in history. This can be seen well on the long-term chart, where the realized loss is represented by its 7-day moving average.

Just a month ago, BeInCrypto analyzed the same on-chain indicator, suggesting that the Realized Loss back in May may have signaled an impending bottom in the Bitcoin price (green circle). The reason for this was the sharp increase in Realized Loss during BTC’s decline from $38,000 to $29,000. At that point, the indicator approached its previous ATH, established during a similar decline in May 2021 (blue circle).

However, the realized loss we are seeing today is at a much higher level than all previous investor loss peaks (red line). The 7-day moving average of the indicator is today at its all-time high at $2.831 billion.

At the same time, it is worth remembering that historically extreme high Realized Loss readings were signals of a local or macro bottom (orange arrows). Therefore, they were usually followed by strong bounces.

We have already lost more BTC

A complimentary look at the Realized Loss indicator is provided by expressing its size not in USD, but in BTC. In this case, it turns out that there were periods when investors decided to sell their assets at a higher loss per their value in Bitcoin at the time.

On-chain analyst @SwellCycle tweeted a chart of Realized Loss expressed in BTC that goes back to 2015. On the chart, he highlighted areas (yellow) of extremely high losses incurred by investors. It turns out that the most severe decline, which occurred on June 13, was only the 3rd highest realized loss in Bitcoin history.

The larger Realized Loss was correlated with Bitcoin’s December 2018 bottom, which was reached at the end of a previous bear market. In contrast, a huge realized loss, the largest ever if measured in BTC, occurred in March 2020 during the COVID-19 crash. Furthermore, a realized loss comparable to current levels was reached during the bear market bottom in January 2015.

Net Realized Profit/Loss reaches ATL

There is one more indicator worth mentioning that also shows that the Realized Loss today is at its highest level ever. The Net Realized Profit/Loss ratio of all transferred coins is calculated by the difference between realized profit and realized loss.

Here again, in the long-term view, we see that Net Realized Profit/Loss has never been lower. Currently, the chart reaches an all-time low (ATL) of $2.199 billion. However, note that this ratio again expresses the realized loss in USD.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.