Bitcoin’s price fell below $20,000, triggering a fresh wave of deleveraging and liquidations that affected miners and long-term investors. Analysts at Glassnode concluded as much.
This weekend, #Bitcoin plunged below the 2017 $20k ATH, as numerous entities in the market were deleveraged or liquidated.
In our latest Week Onchain report, we analyse the financial stress within by the market, including miners and Long-Term Holders.https://t.co/jMoMosDYuk
— glassnode (@glassnode) June 20, 2022
The recent capitulation was the second after Terra ecosystem collapse. The daily volume of realized losses jumped to a record $2.4 billion. Over three days the cumulative figure stood at $7.325 billion.
The bear-market continuation also reduced the profitability of held coins. In this regime, 49% of the issued bitcoins remained, with hodlers accounting for almost two-thirds. In the past, crypto winters ended when this metric fell to 0.40-0.45 — or to 0.49-0.56 in the second case.
Based on the UTXO metric, 26.7% of coins were unprofitable. Previously the bottom was reached when this figure rose to 50-81%.
On the basis of a logarithmic regression model that links market capitalisation and mining difficulty, analysts estimated the total costs of producing one Bitcoin at $17,600. The drop to this level was observed on June 17.
Switching to the inverted difficulty ribbon and the decline in the Puell Multiple Puell Multiple confirm miner capitulation. The current value of the latter (0.39) implies miners’ revenues are 61% below the annual average.
At present, the situation looks worse than during the Great Migration in May–July 2021. Miner stress has been most acute in 2014-2015 and 2018-2019, when Puell Multiple fell to 0.31.
Against Bitcoin’s price drop, miners trimmed positions from 5,000 BTC to 8,000 BTC per month, a pace comparable with capitulation during the 2018-2019 bear market. After slipping below the 2017 ATH, this group turned to coin accumulation at about 2,200 BTC per month.
Long-term investors also faced stress. Over the past week, the amount of coins held by hodlers (over one year) declined from 20,000 BTC to 36,000 BTC per day.
On June 18 the LTH-SOPR indicator fell to 0.64. In previous bear markets, a reversal occurred when the value dropped into the 0.4-0.6 corridor. In other words, hodlers were realizing losses of 40-60%.
“All categories of market participants are close to or have reached ‘pain thresholds’. In the weeks and months ahead the market will watch for signs of sellers’ exhaustion.” the analysts concluded.
Earlier, the famous gold advocate Peter Schiff doubted Bitcoin would bottom below $20,000.
Earlier, Jeffrey Gundlach, the head of DoubleLine Capital, predicted a drop in the price of the first cryptocurrency to the $10,000 level.
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