The on-chain analytics firm Glassnode has explained why the $90,000 to $95,000 price range has recently become a ‘critical’ zone for Bitcoin.
Bitcoin Realized Loss Spiked Each Time BTC Dipped Under $95,000
In a new post on X, the on-chain analytics firm Glassnode has discussed the relevance that the $90,000 to $95,000 price range has recently gained for Bitcoin. Whenever BTC has plunged into this zone during the last couple of months, an indicator called the Realized Loss has observed a spike. The Realized Loss measures, as its name already implies, the total amount of loss (in USD) that the Bitcoin investors as a whole are ‘realizing’ through their selling.
The metric works by going through the transaction history of each coin being transferred or sold on the blockchain to see what price it was moved at before this. If the last transaction value for any coin was more than the current spot price, then that particular token’s sale is considered to be leading to loss realization.
The Realized Loss takes the difference of the two values to calculate the amount of loss involved in the transaction. Then, it takes the sum of it for all such transfers happening on the network. Another indicator, known as the Realized Profit, keeps track of the transactions involving the tokens of the opposite type. That is, the coins that are being sold at a net profit.
Now, here is the chart shared by the analytics firm that shows the trend in the Bitcoin Realized Loss over the last few months:
The value of the metric appears to have seen a spike in recent days | Source: Glassnode on X
As is visible in the above graph, the Bitcoin Realized Loss has surpassed the $100 million mark on several occasions during the last couple of months. All of these spikes coincided with the cryptocurrency falling into the $90,000 to $95,000 range.
The only investors who would be able to sell at a loss at these price levels would be those who entered into the rally late. Given the adverse reaction that the Realized Loss displays to ventures into the range, it would appear that these top buyers already reach their breaking point whenever BTC sees a drawdown of this order.
“This highlights the sensitivity of this price band, where sellers capitulate during corrections,” notes Glassnode. Historically, investor capitulation is something that has led to bottoms for Bitcoin, as coins tend to transfer to more resolute entities during such events.
As long as there are buyers available to take coins off the hands of the loss sellers, the range should act as support for the asset. If, however, profit-taking occurs instead during a drop in the range, then the cryptocurrency may see a lengthened drawdown.
BTC Price
Bitcoin slipped toward the $100,000 mark during its tumble in the past day, but the coin has since seen a bounce as it’s now back at $104,500.
Looks like the price of the coin has registered an overall drop in the last 24 hours | Source: BTCUSDT on TradingView