Analyst: Realized losses from the recent bitcoin pullback have reached a record high, possibly signaling a near-term bottom
BlockBeats News, on February 21, crypto analyst Michaël van de Poppe posted that, "The recent correction in bitcoin has led to a significant surge in realized losses, reaching an all-time high. This is one of the largest realized loss events in bitcoin's history, comparable to the bear market crash in 2018, the March 2020 COVID-19 plunge, and the peak losses during the 2022 Luna/FTX collapse."
A large number of holders are capitulating, either selling at a loss or transferring their BTC while in a loss position. Such extreme realization of losses typically indicates panic selling and forced liquidations in the market. Historically, similar surges in large-scale realized losses often occur at or near cyclical bottoms, as this represents the complete washout of "weak hands" and high-leverage positions.
It is worth noting that the Sharpe Ratio has dropped to its lowest level since the last cycle bottom; the market is experiencing a massive capitulation event with extremely high realized losses; and market sentiment is almost at rock bottom. The only difference is that in this cycle, bitcoin has only fallen about 50% from its historical high, rather than 80%. The bottom is near."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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