Analyst: “It’s hard to be too scared of Bitcoin price action.” Here’s why — TradingView News

Bitcoin hasn’t been doing so well lately, but this analyst isn’t too worried based on the recent trend of an on-chain indicator.

Bitcoin’s unrealized loss has been at low levels recently

In a new post on X, on-chain analyst Checkmate spoke about how the cryptocurrency’s recent price action is not too worrying given the trend of unrealized losses.

The “unrealized loss” here refers to an on-chain indicator that tracks the total loss currently experienced by addresses across the entire Bitcoin network.

This metric works by looking through the transaction history of every coin in circulation to determine what price it last traded at. Assuming that this last transaction was the last time the coin changed hands, the price at that time would reflect its current cost basis.

If this cost basis is higher than the current spot price of the cryptocurrency for any coin, then it can be considered that that particular coin is currently experiencing an unrealized net loss.

Unrealized loss subtracts the two values ​​to calculate the magnitude of the loss for each coin and then sums them. Of course, coins of the opposite type contribute to the Unrealized Gain metric instead.

In the context of the current discussion, it is not the unrealized loss itself that is of interest, but a normalized form, the so-called relative unrealized loss. This metric divides the unrealized loss by the market capitalization of the asset.

Below is a chart showing the trend of this Bitcoin indicator over the last decade or so.

As can be seen in the chart, Bitcoin’s relative unrealized loss peaked during the bear market lows in November 2022 and has been declining since then. Recently, the value of the metric has been close to zero, meaning that losses in the market have been a negligible percentage of the market capitalization.

The reason for these lows is the recent price increase towards the new all-time high (ATH). The entire supply becomes profitable during ATH breakouts, so the unrealized loss drops to zero.

Of course, the indicator also fell to zero earlier in the year when the ATH occurred, but the bearish price action since then caused some investors to make losses again.

Interestingly, however, the indicator’s value was still extremely low, meaning that despite some buying at higher prices, there was no excessive buying.

From the chart, it is clear that in the past, bull market highs were followed by spikes in the indicator, as even a small drop was enough to push all the laggards chasing the hype into the red. This has not been the case in the current cycle so far.

“It’s hard for me to be too scared of Bitcoin price action when unrealized losses look like this,” notes Checkmate. The analyst also warns that things could get worse from here, but that hasn’t happened yet.

BTC Price

The Bitcoin price has continued its bearish momentum over the past 24 hours and has now fallen to $64,500.