A Bitcoin indicator created by on-chain analytics firm Glassnode has just signaled that selling pressure in the market may have run out of steam.
Bitcoin Seller Exhaustion Just Surges
Glassnode has shared an update to its Seller Exhaustion Composite Index for weekly and monthly Bitcoin traders in a new post on X. The “Seller Exhaustion Composite Index” here refers to an indicator that essentially determines if selling on the network has reached exhaustion.
The metric is based on a number of on-chain metrics, most notably realized losses, which measures the total amount of losses locked in by BTC investors.
Historically, crypto prices tend to form bottoms whenever holder capitulation reaches its peak. During such loss-making events, coins move from weak hands to committed entities, so the risk of further sell-offs decreases, allowing the asset to rebound.
In the context of the current topic, the combined data of seller exhaustion among weekly-monthly BTC traders alone is worth looking at. These are investors who purchased their coins between one day and one month ago. Glassnode chose this particular group because there is a statistical relationship between holding time and the propensity to sell. HODLers in the market hold their coins for the long term and are therefore unlikely to engage in selling at any point. The only time these HODLers are forced to capitulate is during major cyclical downturns.
On the other hand, relatively new buyer investors may be prone to panic selling and therefore may experience losses during all stages of the cycle, even bull markets.
Now, here is a chart shared by the analytics firm showing the combined trend of Bitcoin seller exhaustion with new buyers in the market:
As shown in the above chart, the Seller Exhaustion Composite Index just signaled a bullish trend for Bitcoin weekly traders. Glassnode noted: “This reflects the high losses locked in by active BTC traders over the last month.”
The latest round of capitulation by recent buyers comes as the cryptocurrency’s price has fallen after breaking its all-time high (ATH) of $99,000.
As can be seen from the chart, the instances of this group of people losing a lot of money are all related to the bottoming of prices in the past year. Given this pattern, it is possible that Bitcoin will find another bottom after capitulation this time as well.
BTC Price
A few days ago, Bitcoin fell to $90,000, but now seems to have recovered and the price is currently hovering around $95,400.
