 ▲ Bitcoin (BTC) decline/ChatGPT-generated image © |
As the leading cryptocurrency has recently undergone a deep price correction, pushing investors’ unrealized losses to around 19% of total market capitalization, a pessimistic warning has emerged that this trend closely resembles the market conditions seen in May 2022, when the harsh crypto winter began.
According to crypto media outlet Bitcoinist on February 21 (local time), on-chain analytics firm Glassnode noted that the current market pain mirrors that of May 2022, citing trends in Bitcoin’s Relative Unrealized Loss metric. Relative Unrealized Loss is an on-chain indicator that measures the total unrealized losses held by all Bitcoin investors as a proportion of the overall market capitalization.
This metric is calculated by comparing the price at which each coin last moved on the blockchain with the current spot price. Following a recent sharp drop to the $60,000 range, the indicator surged steeply and is currently hovering around 19% while Bitcoin trades near $67,000. This marks the highest level since 2023 and closely resembles the trajectory seen during the transition into the previous bear market.
Glassnode pointed out that the current market structure reflects a level of pain similar to that observed in May 2022. During the 2022 bear market, triggered in part by the collapse of FTX, Bitcoin ultimately found its bottom only after investors’ unrealized losses exceeded 60% of market capitalization. In the present downturn, market tension is rising over when and at what scale of losses Bitcoin will establish its bottom.
Weakened investor sentiment is also evident in the outflow of institutional funds. Amid the market slump that followed the all-time high last October, U.S. spot Bitcoin ETFs have experienced the largest capital outflows in their history. A total of 100,300 BTC has exited spot ETFs, and Glassnode analyzed that institutional de-risking is reinforcing a broader risk-off environment, exacerbating the market’s structural weakness.
Bitcoin is currently hovering around $67,700, continuing to consolidate within a narrow range without clear upward momentum.
Disclaimer: This article is for investment reference only and does not take responsibility for any investment losses incurred based on it. The content should be interpreted for informational purposes only.