With a brief bounce, the price of Bitcoin is now back above the key $70,000 level, showing signs of bullish traction once again. As a result, BTC appears to be showing early indications of stabilization following a wave of capitulation sweeping through the entire market.
Bitcoin Realized Losses Are Dominating The Market
The broader cryptocurrency market is showing positive signs, and Bitcoin’s price has turned slightly bullish after a period of capitulation. However, according to underlying on-chain data, the current market pain has not seemed to have come to an end yet.
Verified author at CryptoQuant and market expert Darkfost shared that market losses are easing after capitulation, but realized losses are still dominating Bitcoin in this context of growing uncertainty. As realized losses continue to dominate on-chain activity, this is an indication that many investors are still closing their positions below their cost basis.
Data shows that there is currently $611 million in realized losses against $346 million in profit, which results in a net Profit and Loss (PnL) of -$264M on a weekly basis. This pattern frequently appears during significant corrections, when the most extreme selling starts to wane, but the market is still processing the effects of recent drops.
Even though the market remains in the negative territory, this profit and loss divergence highlights a clear improvement in the situation. On February 7, Darkfost highlighted that the weekly average PnL was sitting at approximately $2 billion, marking a clear capitulation as Bitcoin’s price fell below the $60,000 level.
During this market trend, short-term BTC holders were constantly the most active players in the sector. These investors currently maintain a larger share of the supply than during the bear market, leaving Bitcoin in a fragile phase.
In January 2023, the percentage of Bitcoin supply classified as short-term holders was 12%, but today, it is 22%, indicating a 2x growth. At this point, it is crucial that BTC’s momentum continues and holds. This slight resilience is bolstering holding sentiment and accumulation among many investors, which is adding to the current consolidation. Meanwhile, it would be a definite improvement to see the net PnL return to positive territory after more than four months of losses and capitulation.
Funding Rates Are Showing A Negative Trend
While Bitcoin struggles to regain an upward trajectory, certain areas appear to be pulling the asset back. For example, BTC Funding Rates is exhibiting bearish action. CW, a data analyst and crypto investor, highlighted that most of the range when the BTC Perpetual Future Funding Rate fell to a negative value were the bottom of a short-term decline.
After that, CW outlined a general upward trend, with no declines confirmed yet. Currently, the funding rate is in negative territory again, which implies that the present price is a short-term bottom for BTC.
Featured image from Pngtree, chart from Tradingview.com
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