Bitcoin Realized-Loss Spike Hits Record; Analyst Says Bottom May Be Near
Bitcoin experienced one of the largest spikes in Entity-Adjusted Realized Loss on-chain, signaling broad capitulation as many holders sold at losses and leveraged positions were forcibly closed. Analyst Michaël van de Poppe highlighted that current realized losses rival capitulation phases from 2018, March 2020 and the 2022 Luna/FTX crashes. Open interest across exchanges collapsed from roughly $45 billion to near $21 billion — a >50% drop indicating rapid deleveraging and long liquidations. Spot BTC ETF flows showed about $315 million in weekly net outflows, reflecting continued institutional caution. MVRV has compressed significantly, showing valuation reset but not the deep undervaluation seen in previous cycle lows (past drawdowns reached 70–85%; BTC is ~50% below its all-time high today). Van de Poppe argues such extreme realized-loss events often appear near local or mid-cycle bottoms, but a confirmed macro bottom will likely require stabilization in ETF flows and broader liquidity. Key metrics: Entity-Adjusted Realized Loss (record spike), Open Interest (~$45B → ~$21B), ETF weekly outflows (~$315M), MVRV compression. Primary keywords: Bitcoin, realized loss, open interest, ETF flows, MVRV, capitulation.
Neutral
The news signals a heavy liquidation and capitulation phase: record Entity-Adjusted Realized Loss and a >50% collapse in open interest point to forced deleveraging and weak-holder exits, which are bearish in the short term because they coincide with price pressure and reduced liquidity. However, historical precedent (2018, Mar 2020, 2022) shows similar realized-loss spikes often accompany market bottoms or local washouts that precede multi-week to multi-month recoveries. The lack of sustained institutional inflows — spot ETF weekly outflows (~$315M) — means a durable bottom is unconfirmed, keeping downside risk elevated. MVRV compression shows valuation reset but not deep-cycle undervaluation, implying this is likely a mid-cycle deleveraging rather than full structural collapse. Short-term implication for traders: heightened volatility, potential for short squeezes or dead-cat bounces; risk management (reduced leverage, wider stops, position sizing) is advisable. Medium-term implication: if ETF flows stabilize and open interest remains low, the market could form a base and attract renewed inflows, making opportunistic long entries viable. Overall, signals are mixed — capitulation (bearish near-term) but possibly constructive for a bottom formation (bullish medium-term if liquidity returns).