Data from on-chain analytics firm Glassnode shows that seller exhaustion is reaching ideal levels for a BTC price leg up.
Almost one month after the FTX implosion began, Bitcoin investors have either capitulated and sold at a loss or continue to hodl unrealized losses.
As Cointelegraph reported, those losses became significant just days after the event, with over 50% of the BTC supply held in the red.
Now, another on-chain metric is painting 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, is repeating behavior from June this year.
Originally created by ARK Invest and David Puell, responsible for the Puell Multiple, the Seller Exhaustion Constant suggests that when volatility is low but losses are high, it is less likely that Bitcoin will go lower.
“Specifically, the combination of low volatility and high losses is associated with capitulation, complacency, and a bottoming out of the bitcoin price,” ARK explained about the metric in a research piece, “A Framework for Valuing Bitcoin,” in 2021.
That situation reflects the current status quo, and if June price action repeats itself, a relief rally should be due for BTC/USD.
In its own description, Glassnode describes such conditions as “low-risk bottoms.”