Bitcoin holders register unprecedented losses as market rout deepens

From May 17 to 23, the volume of losses recorded by Bitcoin holders reached a historic high of $14.2 billion. The scale of capitulation surpassed previous records in March 2020 and in January–February 2018, according to Glassnode.

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#Bitcoin has experienced a tremendous deleveraging, with prices falling over 50%, and on-chain entities taking historically large losses.

We analyse:
— Magnitude of Losses
— Cross Section of Sellers
— Market Deleveraging

Read more in The Week On-chain👇https://t.co/mafnIqtfTp

— glassnode (@glassnode) May 24, 2021

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The May 19 figure of $4.52 billion was three times higher than the losses seen in previous episodes of mass unwinding of losing positions.

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The net loss indicator on May 19, accounting for coins sold at a profit, also hit a new high. The figure of $2.56 billion, up 185% from the previous historical maximum of $1.38 billion, recorded in March 2020.

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Net losses led to a decline in Bitcoin’s realized market capitalization, which takes into account prices at the last activity. For the week, the metric fell from an all-time high of $377 billion to $370 billion.

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The share of wallets with “profitable” coins fell to 76%. A similar ratio was observed during corrections in 2011, 2013 and 2016.

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Experts highlighted three groups of participants who could come down on the sellers’ side in the near term:

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• 24% of \”loss-making\” addresses that bought Bitcoin above current levels in the last three-to-four months;
• holders of \”profitable\” coins who doubt the recovery of the uptrend;
• miners amid tighter regulation of the industry in China.

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4, Were miners selling Bitcoin? Some already panic sold, others had no choice. Not everyone have access to western hosting sites. There are also added level of uncertainty on current RMB OTC trading channels. Need fiat to cover operational costs at end of the day.

— Mustafa Yilham (@MustafaYilham) May 23, 2021

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The key question is: how much of the loss-making coins will join the panicked selling? Despite the seriousness of the latest capitulation, the magnitude of the relative unrealized losses is small by historical standards, — the analysts wrote.

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The May 19 market crash occurred amid a marked rise in coin inflows to the exchange wallets of three Bitcoin exchanges: Binance, Bittrex and Bitfinex. Glassnode says this is driven by a large proportion of retail investors and the absence of U.S. residents.

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The downward trend in exchange balances, however, has not changed overall, despite May 2021 events, analysts noted.

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As reported, whales purchased nearly 122,600 BTC amid the latest market downturn.

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