Bitcoin on-chain loss metrics hit 2022 Luna collapse levels at higher prices

Bitcoin’s on-chain loss metrics hit levels comparable to 2022’s Luna collapse, though at higher price points, signaling late-cycle capitulation rather than systemic crash.

Bitcoin’s (BTC) on-chain loss indicators have reached levels comparable to those observed during the Luna/UST collapse in 2022, though at significantly higher price points, according to analyst Axel Adler Jr.

Bitcoin’s Net Realized Profit/Loss metric has entered deeply negative territory, with the 7-day moving average falling into negative readings on Feb. 7 before improving slightly by Feb. 10, Adler reported. The current reading represents the second deepest negative level in the metric’s recorded history, exceeded only by June 18, 2022, when the indicator reached a record low during the Luna/UST crash and subsequent liquidations.

The metric has remained below a significant negative threshold for five consecutive days, forming what Adler characterized as a sustained cluster of seller pressure. According to the analyst, realized losses are dominating realized profits on moved coins, indicating the market is processing supply from participants selling below their cost basis.

“The depth and duration of the current negative regime point to massive capitulation of participants who bought coins at higher levels,” Adler stated in his analysis. “The key reversal trigger is the return of Net Realized Profit/Loss above zero, which would signal the market’s transition from loss dominance to profit dominance.”

A companion metric, Bitcoin Realized Loss (7DMA), showed realized losses rising around Feb. 7 and maintaining elevated levels through Feb. 10. Adler described this as one of the highest smoothed levels in the metric’s recorded history, comparable to June 2022 readings.

The analyst noted that the 7-day smoothing may understate peak stress in real time. During the 2022 episode, single-day losses reached approximately three times higher than the weekly-smoothed figure, according to Adler. In the current period, he identified a single-day realized loss on Feb. 5 as the second-largest one-day loss in Bitcoin’s history.

A key distinction between the current situation and 2022, according to Adler, is the price level at which losses are being realized. In 2022, similar realized-loss levels occurred with bitcoin trading at substantially lower prices. The current losses are being crystallized at higher price levels following a pullback from recent peaks.

“Back then, Realized Loss at a high weekly level was occurring at a price that was far lower,” Adler stated. “Now, comparable loss volumes are being locked in at a much higher price, which suggests not a systemic crash but rather a flushing out of late bull-cycle entries.”

Adler outlined two key indicators to monitor for potential market recovery. The first is a sustained move of Net Realized Profit/Loss (7DMA) back above zero for multiple weeks, signaling a transition from loss dominance to profit dominance. The second is a decline of Realized Loss (7DMA) below a lower threshold, indicating that forced selling pressure is subsiding.

The analyst cautioned that continued price weakness could extend and deepen the current loss regime, potentially converting a correction into more severe capitulation. Bitcoin was trading around $67,000 at the time of the analysis, according to the report.