Crypto Recovery Stalls Amid Rising Realized Losses

The crypto market suffered a devastating blow in October that sent prices crumbling and sentiments hitting rock bottom. While the market is struggling to recover, rising realized losses have emerged as a new hurdle it must scale.

On-chain analytics firm Glassnode in a comment observed that realized losses — a key metric that quantifies the total loss of a digital asset based on the acquisition price and the sale price — is on the rise among new investors as crypto assets face the near impossible task of recovering from the previous crash.

Glassnode notes that this trend signals a growing stress among speculators seeking quick profits with no interest in the macro market outlook, which further worsens the fate of the market in a seemingly unending bearish conundrum.

Speculators Suffer Losses; Is A Recovery Near?

The data shared by Glassnode shows the seven-day moving average of realized losses for short-term holders. These are new market entrants commonly referred to as “weak hands”. They are more likely to exit positions impulsively based on market volatility, which is the trend that is currently seen.

According to the firm, this trend is reflected in the stress seen among speculators such as day traders who are getting shaken out of the market as they seek escape from the excruciating pain of unending losses. Interestingly, Glassnode isn’t the only platform that has noticed this depressing turn of events.

Another crypto analysis firm CryptoQuant has also observed that Bitcoin short-term holders have grown weary and are in capitulation to cut their worsening losses. Although on a different scale, the analysts observed this same trend was seen at the lows of previous correction phases in this bull cycle.

In the broader scheme of things, CryptoQuant sees a likely rebound in the short-term as the capitulation reaches an advanced stage. On the flip side, the market faces a high probability of plunging into a much deeper correction if Bitcoin loses the critically important $80,000 support level. 

Bitcoin Holds Key Support for Possible Recovery

Despite the high capitulation from short-term holders and speculators, Bitcoin is currently sitting above $86,000, a future-defining level secured after the recent rebound. In agreement with CryptoQuant, an analyst Michaël van de Poppe has stressed that this level is the last line of defense against a crash to $80,000 or lower, which can trigger a fresh nosedive.

If November closes above $90k, Poppe affirms that the current price will be the bottom, setting the stage for not just Bitcoin but the rest of the market to begin its exodus out of the current bear cave.

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