Bitcoin holders may need the on-chain losses for Bitcoin price to hit a significant low to triple.
Market analysis by Baro Virtual suggests that the ongoing bear market is not severe enough yet compared to historical downturns.
Total Bitcoin Losses currently stand at $671 million
As analysts anticipate a drop back to $14,000 or below for BTC/USD, the focus shifts to where Bitcoin might hit its bottom, a key concern in the crypto community right now.
Baro Virtual looked into data from Whalemap, an on-chain analytics platform, and pointed out that historical BTC price bottoms typically occurred when the losses from on-chain transactions equaled or surpassed the profits from the preceding bull market.
In simpler terms, the losses need to be at least as high as the gains from the prior bull run to signal a potential price bottom. Otherwise, Bitcoin has tended to decline further eventually.
Based on Whalemap’s moving profit and loss (MPL) data, Baro Virtual suggested that current losses do not match Bitcoin’s historical patterns of capitulation, hinting at the possibility of further price drops.
However, according to the analysis, the actual bottom for Bitcoin could be much lower than the recent two-year low of $15,480. The losses would need to reach a range of $629 million to $1.029 billion to confirm a complete capitulation.
Potential 80% Drop Target for Bitcoin
These findings align with the view that the ongoing 2022 bear market has yet to reach the depths seen in 2014 and 2018 during Bitcoin’s previous halving cycles.
In comparison to the all-time high in November 2021, BTC/USD has experienced a 77% drawdown, which is lower than previous bear markets. Nevertheless, data from Glassnode indicates that Bitcoin is approaching maximum losses concerning all-time highs.
Additionally, the percentage of BTC held at a profit is near the lows typically seen before major market bottoms.
This year, Bitcoin has faced a 78% drawdown, the largest decline since 2017-18, with the current decline lasting for 376 days, making it the second longest after the 2013-15 bear market that lasted for 410 days, as noted by Charlie Bilello, the founder and CEO of Compound Capital Advisors.
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