Bitcoin (BTC) is entering a prime “low-risk bottom zone” as sellers finally accept FTX losses.
Data from on-chain analytics firm Glassnode shows that seller exhaustion is reaching an ideal level for BTC price to rise.
Bitcoin sellers face low BTC price volatility
Almost a month into the FTX implosion, Bitcoin investors have either capitulated and sold at a loss or continued to take unrealized losses.
As Cointelegraph reported, these losses became significant just days after the event as over 50% of BTC supply was in the red.
Now, another on-chain metric paints a potentially more bullish picture when it comes to hodlers’ loss-making BTC investments.
The seller exhaustion constant, which measures the relationship between supply in profit and 30-day volatility, repeats the behavior of June this year.
Originally developed by ARK Invest and David Puell, responsible for the Puell Multiple, the seller exhaustion constant suggests that Bitcoin is less likely to decline when volatility is low but losses are high.
“In particular, the combination of low volatility and high losses is associated with capitulation, complacency, and a bottoming out in bitcoin price,” ARK explained of the metric in a 2021 research paper, A Framework for Valuing Bitcoin.
This situation reflects the current status quo and if price action repeats itself in June, a recovery rally for BTC/USD should be due.
In its own description, Glassnode describes such conditions as “low-risk bottoms”.
Chart of Bitcoin Seller Exhaustion Constant. Source: Glassnode
Bitcoin miners are in pain again
However, hurdles remain for this recovery rally to come to fruition.
Related: Crypto and Surrender – Is There a Silver Lining? Watch Market Talks on Cointelegraph
Bitcoin miners, feared they are entering a new wave of capitulation, have ramped up selling BTC reserves, data confirms.
In the face of a perfect storm of record hash rates and dwindling profit margins, miners have signaled a shift is coming, with bitcoin network fundamentals only now beginning to adjust.
“We may be entering a double-dip miner capitulation phase,” warned William Clemente, co-founder of crypto research firm Reflexivity Research, this week, referring to the popular Hash Ribbons metric used to monitor miner profitability:
“Hash bands have just initiated a bearish cross, historically this has been a leading indicator of miner capitulation.”
Bitcoin Hash Ribbons Chart. Source: William Clemente/Twitter
Glassnode’s miner outflow multiple, which measures BTC outflows from miner wallets relative to their one-year moving average, is now at its highest level in six months.
At 1.073, as with seller exhaustion, the multiple nonetheless reflects June’s macro BTC price floor.
Bitcoin miner outflow multiple chart. Source: Glassnode
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