The bull market euphoria that drove prices to new highs throughout 2021 has given way to a market downturn for any Bitcoin (BTC) buyer who has made a purchase since January 1, 2021. Glassnode data shows that these buyers are “underwater now” as the Market prepares for a final capitulation.

Bitcoin Net Unrealized Profit/Loss. Source: glassnode
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As seen in the chart above, NUPL, which is a measure of a network’s total unrealized gains and losses as a share of market capitalization, indicates that “less than 25% of market capitalization is in earnings,” which “resembles a market structure equivalent to pre-surrender phases.” in previous bear markets.”

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Based on previous surrender events, if a similar move occurs at current levels, the price of bitcoin could fall into the $20,560 to $25,700 price range in a “full-blown surrender scenario.”

The market is looking for a bottom

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With the crypto market clearly trading in bear market territory, the question on everyone’s mind is “Where is the bottom?”

One metric that can help provide some possible guidance is the Mayer Multiplier, an oscillator that tracks the relationship between price and the 200-day moving average.

Mayer’s Multiple Model for Bitcoin. Source: glassnode

According to Glassnode, in previous bear markets, “oversold or undervalued coincided with Mayer Ratio dips in the 0.6-0.8 range” and this is exactly the range that Bitcoin is currently in.

Based on price action in previous bear markets, Bitcoin’s recent trading range between $25,200 and $33,700 coincides with Phase B of previous bear market cycles and could mark BTC’s low in the current cycle.

The Bitcoin realized price model also gives an idea of ​​what a potential Bitcoin price bottom might be, with the current value provided by Bitcoin. data provider LookIntoBitcoin suggests that the BTC strike price is $23,601 as of June 5th.

Realization price of Bitcoin. Source: LookIntoBitcoin

Combining the two suggests that the low for BTC could be in the range of $23,600 to $25,200.

Amid Crypto Bear Market, Institutional Investors Buy Bitcoin: CoinShares

Short-term holder and miner surrender

In the current market conditions, short-term hodlers have mostly dominated selling, similar to the behavior seen during the previous two extended bear markets, when long-term holders held over 90% of the profits in the market.

Long-term Bitcoin holders get a share of the supply in profits. Source: glassnode

Bitcoin’s recent plunge below $30,000 has seen the percentage of supply in profits exceed 90% for a cohort of long-term holders, suggesting that short-term holders have “essentially reached a near-peak pain threshold.”

Miners have also been net sellers in recent months, according to Glassnode, as the decline in BTC has reduced miner profitability, resulting in “a cumulative reduction in miner balances of 5-8k BTC per month.”

Change in the net position of a bitcoin miner. Source: glassnode

If the price of BTC continues to decline from now on, the possibility of an increase in miner capitulation is not out of the question, as demonstrated in the past by the Puell Ratio, which is the ratio of the daily cost of issuing bitcoins to the 365-day moving average of that value.

Puell multiplier against BTC price. Source: LookIntoBitcoin

Historical data shows that the indicator fell to the zone below 0.5 in the late stages of previous bear markets, which has not yet happened in the current cycle. Based on current market conditions, a further 10% decline in BTC price could lead to a final capitulation of miners that would resemble the price cuts and sales seen at the peak of previous bear markets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Every investment and trading step involves risk, you should do your own research when making a decision.