Bitcoin Markets in Capitulation After Worse Quarterly Loss in a Decade

Updated by Geraint Price
In Brief
  • Bitcoin markets are in capitulation according to the NUPL metric.
  • BTC prices have lost 58% in Q2 making it the worst for 11 years.
  • Bitcoin failed to hold $20K and has fallen below it again.
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Analysts have been predicting a final capitulation event for some time now, but it could already be happening according to on-chain metrics.

A final capitulation or final flush out is a rapid slump in prices following several months of down trending. It has happened in previous bear market cycles, and many have predicted that it will occur in this bear market.

On-chain analytics provider Glassnode has highlighted capitulation events by using the entity-adjusted net unrealized profit/loss (NUPL) metric. NUPL analyzes the difference between unrealized profit and unrealized loss to determine whether the network as a whole is in a state of profit or loss.

A value above zero suggests that the network is in a state of net profit, whereas those below zero indicate a state of loss, which is where things are at the moment.

The metric is currently in the red zone, which signifies a state of capitulation. The magnitude is similar to the massive slump triggered by the pandemic-induced lockdowns in March 2020. However, it has yet to reach the levels it fell to during the Dec 2018 bear market capitulation event.  

Worse quarterly loss in 11 years

Some analysts have predicted that this final flush-out is still to come, which could send BTC prices tumbling to around $13,000. This would equal the drawdown in the last bear market, which was 82% from the all-time high. Bitcoin is currently trading at around 70% off its peak price.

The record-breaking bear market keeps producing new lows in terms of statistics, with bitcoin now having been through its worst quarter in 11 years.

The quarter ending June 30 culminated with a BTC loss of 58% as the asset nosedived from $45,528 on April 1 to end the period at $19,098 according to CoinGecko.

CNBC’s Brian Kelly said that things were “probably months away from the ‘Lehman moment’ meaning that one last flush down,” before adding that there was still a lot of leverage and collateral that needs to be flushed out before markets bottom.

Messari crypto founder Ryan Selkis commented that the terrible quarter was due to a lack of transparency from lenders.

“And it’s largely because of the lack of transparency we have from lenders – which are basically shadow banks – and many crypto VCs who don’t care about investor protection. This is why the regulators despise us.”

BTC fails to hold $20K

Bitcoin prices hit an intraday low of $18,782. It had since bounced back to recover the psychological $20K level, but almost immediately dropped back below it as resistance was too strong.

At the time of writing, BTC was changing hands for $19,562, having lost 71.6% from its all-time high in Nov.

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