'Bull or bear market?' Bitcoin losses from panic selling mount in 2022

Published at: Jan. 28, 2022

Bitcoin (BTC) sellers' losses are mounting as the BTC price downturn shows that some investors are panicking at current prices.

Data from on-chain analytics firm Glassnode and trading suite Decentrader shows that in January, more and more BTC entities have been selling coins for less than they purchased them.

On-chain loss selling now "consistent"

While no one wants to sell an asset without profit, Bitcoin downtrends tend to see a certain cohort of market participants do so anyway — for fear of greater losses if they stay put.

This panic selling is often derided by long-term investors, who argue that stronger, more liquid players will scoop up the supply to the detriment of those who sold.

Analyzing the spent profit output ratio (SOPR) metric, Decentrader analyst Philip Swift revealed that while selling overall remains relatively low, panic has set in this year.

"SOPR (Spent Output Profit Ratio) has had a consistent patch of on-chain loss selling recently," he summarized to Twitter followers this week.

SOPR takes the aggregate "price bought versus price sold" data for BTC in a given period to produce an overall impression of whether sellers are in profit or at a loss.

As noted by its creator, Renato Shirakashi, the psychology of selling at a loss means that only those in panic mode are likely to do so, and by extension, the shallower selling seen this month could be cause for relief.

"It's interesting to note that the selling at a loss the past few months has been much more shallow vs. 2018/19 bear market, but much deeper than we saw in either bull run period," Swift nonetheless added.

"Is this a bull or bear market rn?"

As Cointelegraph reported, Bitcoin price activity has suprised with its 50% retracement since November, this being somewhat uncharacteristic of what should be the most bullish part of its halving cycle.

Zooming out, the whole of 2021 arguably looks like a consolidation zone after rapid gains a year ago.

Big players dominate the transactions

Should selling be from low-volume retail investors, this would meanwhile chime with other data covering on-chain transactions.

Related: Derivatives data suggests that Bitcoin’s $39K bounce was a mere blip

As Glassnode confirmed this week, the majority of transactions now involve significant sums of $1 million or more. This, the firm concluded, points to institutions, not retail, as the driving on-chain force.

"Bitcoin transfer volumes continue to be dominated by institutional size flows, with more than 65% of all transactions being larger than $1M in value," a tweet read.

"The uptrend in institutional dominance in onchain volumes started around Oct 2020 when prices were around $10k to $11k."

2022 has been announced as the year in which institutions indeed return to the Bitcoin space.

Tags
Related Posts
Another $1 billion wipeout: Why is Bitcoin seeing extreme price moves?
Nearly $1 billion worth of Bitcoin (BTC) futures contracts were liquidated on Jan. 13, a day after the big shakeout. The continuous loop of liquidations is causing extreme volatility and large price swings in the cryptocurrency market. What are futures liquidations, and why are so many Bitcoin positions being liquidated? In the Bitcoin futures market, traders borrow additional capital to bet against or for Bitcoin. The technical term for this is leverage, and when traders use high leverage, the liquidation threshold gets tighter. For example, if a trader borrows 10 times the initial capital, a 10% price move to the …
Bitcoin / Jan. 13, 2021
Bitcoin sees record 100 days above $10K as one analyst eyes ‘parabolic’ 2021
Bitcoin (BTC) has officially beaten a new record as BTC/USD trades above $10,000 for 100 days, and major gains should come next. As voting in the United States’ presidential election ended on Nov. 3, Bitcoin saw a landmark moment of its own — 100 days straight trading in five figures. Bitcoin sees record stretch above $10,000 The achievement is not just impressive as a record for $10,000-plus prices. According to previous data, once Bitcoin trades above these significant price levels for 100 days, BTC/USD swiftly increases by an order of magnitude. As Cointelegraph reported last week, the length of time …
Adoption / Nov. 4, 2020
Crypto Markets in The Green, XRP Sees Major Boost Briefly Overtaking ETH by Market Cap
Tuesday, Nov. 6: top cryptocurrencies have seen strong gains on the day, with Ripple (XRP) temporarily overtaking Ethereum (ETH) as the top altcoin by market capitalization. Market visualization from Coin360 Bitcoin (BTC) is up 0.3 percent over the last 24 hours, and is trading at around $6,447 as of press time. Having briefly dipped below $6,400 during the day, BTC has rebounded and is pushing a slightly higher price point. BTC is still down 1.67 percent over the past 30 days. Bitcoin 7-day price chart. Source: CoinMarketCap ETH has seen some growth over the 24-hour period, up 3.64 percent from …
Bitcoin / Nov. 6, 2018
Bitcoin Price Stays Static at $8,800 as NEO, BNB Steal the Limelight
Bitcoin price (BTC) continued its daily trading pattern on Nov. 13, hovering just under $8,800 after losing support at $9,000. Cryptocurrency market daily overview. Source: Coin360 Bitcoin tracks sideways below $9K Data from Coin360 showed another lackluster day for BTC/USD, with little progress over the past 12 or 24 hours. The week had begun with Bitcoin losing its foothold higher up, exiting a trading corridor between $9,000 and $9,500 and so far failing to reclaim it. Bitcoin seven-day price chart. Source: Coin360 As Cointelegraph reported, analysts had remained broadly bullish on longer-term market prospects. Now, however, the short term could …
Bitcoin / Nov. 13, 2019
Bitcoin price reverses gains on New Year's Eve; hodlers continue stacking sats
Bitcoin (BTC) and the broader cryptocurrency market turned lower Friday afternoon, erasing intraday gains to cap off a highly successful year on a weaker note. Market Update The BTC price fell below $46,000 Friday and was last seen hovering below that level, according to data from Cointelegraph Markets Pro and TradingView. The flagship cryptocurrency is down 2.9% on the day to trade at $45,933. BTC's price is down more than 5% from the intraday peak. Altcoins faced a similar downward trajectory as Bitcoin, with the likes of Ether (ETH), Binance Coin (BNB) and Solana (SOL) each falling more than 2%. …
Bitcoin / Dec. 31, 2021