Three Indicators That Bitcoin Price Plunge Isn’t Over

$20,000 is scary, but it may not be the end of Bitcoin’s latest bear market.

Bitcoin’s price near $20,000 worries markets, but after narrowly avoiding a break below support, is the worst really over?

Judging by multiple on-chain metrics, it seems that this cycle has not yet ushered in the greatest pain.

The stakes are high for many bitcoin holders this week — nearly 50% of the bitcoin supply is in the red, and miners are sending more bitcoin to exchanges.

Even some of the biggest bitcoin investors, notably MicroStrategy, have had to defend their beliefs in bitcoin when prices fell.

With targets as low as $11,000, Cointelegraph looked at how much more the market technically needs to fall to match the historic bottom area.

Fragile holders will still exit the market

Even though the price of bitcoin has fallen to an 18-month low, its price action has not yet driven all speculators away. According to the RHODL Ratio metric by on-chain analytics resource LookIntoBitcoin founder Philip Swift, there should be more capitulations to come.

This is because historically, at macro price bottoms, the ratio between short-term holders and long-term holders favors the latter.

The RHODL specifically adopts the “realized upper limit HODL wave”, and the RHODL ratio (RHODL Ratio) refers to the ratio between the RHODL band of 1 week and the RHODL band of 1-2 years.

Essentially, once RHODL enters the green zone, it means that capitulation has peaked and a price bottom is imminent or has been established. Data from on-chain analytics firm Glassnode shows that so far, RHODL has not entered its green zone.

Three Indicators That Bitcoin Price Plunge Isn't Over

Bitcoin RHODL Ratio chart Source: Glassnode

Not enough holders underwater

It appears that the entire Bitcoin market is in the red, but above $20,000, many are holding onto what could be modest gains in hopes of a rebound.

On-chain analytics platform CryptoQuant revealed that as of June 16, only 46% of the total BTC supply was in the red.

The data itself is impressive, but not enough to call it a macro capitulation event if historical patterns are taken into account.

According to CryptoQuant, at least 60% of the supply needs to incur unrealized losses to be called a capitulation – as was the case in March 2020, late 2018 and earlier.

Three Indicators That Bitcoin Price Plunge Isn't Over

Chart of the percentage of Bitcoin supply that is in the red. Source: CryptoQuant

CryptoQuant CEO Ki Young Ju pointed to the significance of the return of BTC/USD to its realized price last week. The event, two years in the making, means the spot price will be lower than the average price of all bitcoin the last time it moved.

“It’s been two years since the big sell-off in March 2020,” he commented at the time.

Miners not capitulating despite ‘staggering’ Bitcoin inflows to exchanges

While bitcoin miners may be producing closer to $30,000 than $20,000 in production costs, they have yet to start selling their hoarded bitcoins to cover the cost. Cointelegraph reports that Bitcoin is flowing into exchanges at the fastest pace in seven months.

Bitcoin’s network hashrate has yet to take a serious dip, which is common during times of price pressure.

The absence of this trend is confirmed by the Hash Ribbons indicator created by Charles Edwards, CEO of asset manager Capriole.

Hash Ribbons use hashrate’s 30- and 60-day moving averages to determine when miner capitulation will occur. Once the rising 30-day moving average crosses the 60-day moving average, the “worst” can be considered over as miners have resumed work.

So far, that crossover hasn’t happened, which historically means the greatest pain may lie ahead.

Three Indicators That Bitcoin Price Plunge Isn't Over

Bitcoin Hash Ribbons chart Source: Glassnode

“The amount of bitcoin miners are sending to exchanges is impressive,” economist, trader and entrepreneur Max Krueger said of miner activity this week.

Many miners will be in deep trouble with immature BTC, and yesterday’s panic at the expected price drop below $20,000 was justified.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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