Why Bitcoin’s $707 billion loss overhang means its recovery will take months
Active addresses have shrunk considerably, but the BTC moved on-chain remained comparable to December 2024's levels.
Losses have been dominating the world’s leading crypto’s market cap lately. In fact, roughly $707 billion invested in Bitcoin [BTC] were at a loss at press time, compared to only $380 billion in profits.
The metric was aggregated daily and gave an average of the capital currently held in loss or profit on Bitcoin spot positions.
According to the analyst Darkfost, it could take a long while for Bitcoin to battle past the capital in loss. Time is an important factor when coming out of a bear market. The market will take several months to put most of the capital back in profit.
It is at that stage that a market expansion, or a bull run, can gather steam and get going.
Bitcoin sentiment under assault
On 2nd November, AMBCrypto reported that Brazilian exchange Mercado Bitcoin halted transfers in response to a security incident that drained $40 million. It came just days after the Binance heist.
The exchange has since resumed withdrawals, and deposits remained unaffected. The sentiment is still highly pessimistic though. Especially since BTC’s price hit a low of $76,541 on Monday, 2nd November.
The $75K-demand zone, which coincided with the short-term holder cost basis level, has also emerged as a key support level that swing traders and long-term investors will be watching.
Active Bitcoin addresses decline considerably
Crypto analyst Axel Adler Jr. also observed that the 30-day average of active addresses was at 629k, 43% below December’s 2024 peak of 1.10 million addresses.
Similarly, in 2018, the active addresses fell by 50% from 1.10 million to 547K over a period of three months. This, compared to the almost two-year activity contraction from 2024.
While active addresses fell, the 30-day average of Bitcoin daily transfer volume was down only 5.4% compared to December 2024, from 865K to 819K BTC.
While activity has shrunk considerably, the coins moved on-chain remained comparable.
Final Summary
- Around twice as much of the capital invested in Bitcoin was at a loss ($707 billion), than in profit ($380 billion).
- Active addresses shrunk considerably, but BTC moved on-chain remained is now comparable to December 2024’s levels.
