Bitcoin Realized Losses Rise to 2022 Levels Following Price Drop Below $90,000

Bitcoin's recent price movements have led to increased stress among traders, with on-chain data indicating that realized losses have surged to levels nearly matching those seen during 2022.

Key Takeaways

Bitcoin's realized losses have surged to levels comparable to those seen during the 2022 bear market.
The recent drop below $90,000 has forced many traders to sell at a loss.
Liquidity in the market is weakening, leading to decreased trading activity.
Long-term holders are taking profits, with daily realized gains reportedly at $1 billion.
The current market sentiment is cautious, with investors focused on potential recovery following the Federal Reserve's interest rate cut.

Bitcoin

Glassnode’s latest Week-On-Chain report reveals that while Bitcoin trades above a crucial cost basis, it is also facing significant strain from heightened loss realizations, declining demand, and weakening liquidity, placing short-term investors in a challenging situation.

Rise in Realized Losses

Glassnode's analysis shows that the realized losses for Bitcoin entities have surged dramatically, nearing levels observed during the steep retracements of the 2022 bear market. Notably, the Relative Unrealized Loss (30D-SMA) has jumped to 4.4%, a significant increase after remaining below 2% for nearly two years.

This rise in loss realization illustrates that many market players have been forced to sell their coins at prices below their original purchase costs due to the recent dip below $90,000. As a result, the gradual profitability recovery noted earlier in the year has been disrupted.

Despite a recent uptick in Bitcoin’s price, bouncing from a low of $92,000 on November 22, the pressure on holders persists. Glassnode reports that entities continue to lock in losses at an accelerating rate, with the 30-day average realized losses now around $555 million per day.

Bitcoin
Source: Chart from Glassnode

These conditions indicate a declining confidence among investors regarding Bitcoin's short-term growth potential, prompting many to reduce their exposure, even at a loss. The report emphasizes that to address this situation, a renewed influx of liquidity and demand is essential to restore investor confidence.

Additionally, Glassnode notes a significant increase in profit-taking among long-term holders, with realized gains soaring to approximately $1 billion daily, briefly reaching a new record of above $1.3 billion.

Despite this high level of distribution, Bitcoin is currently trading just above the True Market Mean, which is a historical cost-basis benchmark acting as structural support. The price drop below $90,000 has brought this zone near its limits, but some signs of demand suggest the price might revisit the 0.75 quantile around $95,000 and potentially approach the short-term holder cost basis.

Spot ETFs, Futures, and Options Markets Show Weakness

The Glassnode report highlights ongoing weakness in ETF flows, which have cooled significantly following a period of strong inflows earlier this year. This reduction reflects a decline in one of the principal sources of buy-side liquidity for Bitcoin.

Furthermore, spot market liquidity has diminished, with order books on major exchanges currently resting at the lower end of their 30-day range. This scenario has contributed to reduced trading activity through November and into December, offering fewer liquidity flows to manage volatility or sustain market movements.

The positioning in derivatives markets echoes this caution, as funding rates remain near neutral. Additionally, futures open interest has been subdued, struggling to recover meaningfully since the downturn below $90,000.

Overall, the sentiment across major trading venues is uniform: liquidity remains thin, and participants are adopting a defensive stance rather than pursuing aggressive short-term strategies. The focus now shifts to how Bitcoin will perform in light of the recent interest rate cut by the Federal Reserve.

Bitcoin
BTC trading at $90,134 on the 1D chart | Source: BTCUSDT on Tradingview.com