Current Bitcoin Market Conditions Mirror Early 2022, According to Glassnode

Summary:
According to Glassnode, an on-chain analytics firm, the current state of the Bitcoin market closely resembles the sideways market conditions observed in early 2022. With a significant portion of Bitcoin's supply now held at a loss, there are indications of a fragile balance between buyer capitulation and seller exhaustion.

Key Takeaways

Bitcoin's price now resembles the early 2022 sideways market phase.
Over 25% of Bitcoin's supply is currently held at a loss, indicating market fragility.
The Total Supply in Loss metric reached the highest level since September 2023.
The long-term holder SOPR suggests that long-term investors are still selling at a profit, albeit with reduced margins.

On-chain chart comparing current Bitcoin price losses to early 2022 sideways market conditions.

Current State of the Bitcoin Market

According to Glassnode's latest weekly report, Bitcoin's price is beginning to resemble the sideways market condition observed in the first quarter of 2022. Since mid-November, Bitcoin (BTC) has fallen below the 0.75 quantile, with more than 25% of its total supply now in the red.

This situation is leading the market into a delicate balance, where the risk of top buyers capitulating is matched by the potential for seller exhaustion to create a market bottom.

Supply Quantiles Cost Basis Model

Glassnode utilized its Supply Quantiles Cost Basis Model, which identifies specific price levels associated with different degrees of investor profitability. The model tracks three supply quantiles: 0.75, 0.85, and 0.95. When Bitcoin trades at the 0.75 level, 75% of the supply remains profitable; at 0.85 and 0.95, these correspond to 85% and 95%, respectively.

Currently, Bitcoin has dipped below all three quantile levels, indicating that a significant portion of its supply is now unprofitable.

Total Supply in Loss

Further supporting this comparison, the Total Supply in Loss metric shows the total amount of Bitcoin circulating at a net unrealized loss. Last week, the 7-day moving average of this metric reached 7.1 million Bitcoin, marking the highest level since September 2023.

The current supply in loss, fluctuating between 5 million and 7 million Bitcoin, parallels the figures seen during the early 2022 sideways market.

Long-Term Holder Profit Analysis

The Bitcoin long-term holder Spent Output Profit Ratio (SOPR) also reflects conditions similar to those from early 2022. This metric evaluates whether Bitcoin investors, who have been holding their assets for more than 155 days, are selling at a profit or loss.

Although the long-term holder SOPR has dropped sharply in recent weeks, it remains above 1. This indicates that long-term holders are still selling their Bitcoin at a net profit, although the current value of 1.43 signifies a notable reduction in their profit margins.

Conclusion

Overall, Bitcoin has seen a minor decline over the past 24 hours, according to recent market data. As the market evolves, analysts and investors alike will be closely monitoring these key indicators for insights into future price movements.