As sellers finally take their losses on the FTX collapse, BTC is moving into a prime “low-risk bottom” zone. According to data from on-chain analytics firm Glassnode, seller exhaustion is at the ideal point for a BTC price increase.
Investors in BTC have either given up and sold at a loss or have continued to hoard unrealized losses for almost a month since the FTX insolvency started. According to several on-chain metrics, those losses grew exponentially a few days after the incident, with more than 50% of the BTC supply held in losses.
Another on-chain indicator currently shows a potential positive picture for holders losing BTC investments. BTC is repeating its price action at the middle of this year as indicated in the Seller Exhaustion Constant. This Constant measure the interlink between BTC supply in financial gains and a 30-day volatility.
The Seller Exhaustion Constant contends that Bitcoin is less likely to decline when volatility is low, but losses are high. In particular, low volatility and high losses are associated with capitulation, complacency, and BTC price bottoming.”
This Constant was first developed by ARK Invest and David Pull, who also invented the Pull Multiple. ARK discussed these metrics in a 2021 research article titled “Framework for Valuing Bitcoin.”
This occurrence reflects the current BTC price condition. Hence, if this price action from June repeats itself, a relief price rally for BTC should be imminent. Glassnode refers to these situations as “low-risk bottoms.” However, the realization of that relief rally still faces several obstacles.
Bitcoin Miners’ Anxiety
According to on-chain data, Bitcoin miners have increased sales of their BTC holdings amid fears that they are beginning a new wave of capitulation. Miners have warned of an impending upheaval due to soaring hash rates (near their peak records) and declining profit margins.
Also, the Bitcoin network’s fundamentals are now changing to reflect these miners’ actions. William Clemente, a top-level executive of cryptocurrency research company Reflexivity Research, issued a warning this week about the possibility of a double dip miner capitulation period.
He referenced the well-known Hash Ribbons tool, which tracks miner profitability. This tool hints at the possibility of the bear market that has historically been useful for determining miner capitulation.
Meanwhile, Glassnode’s miner outflow multiple metrics are currently at their highest in six months. This metric compares BTC outflows from miners to the one-year moving average.
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