Three Indicators That Bitcoin's Price Slump Isn't Over

Bitcoin's near-$20,000 price has markets worried, but after narrowly avoiding a break below support, is the worst really over?

Judging by multiple on-chain metrics, it appears that this cycle has not yet ushered in the greatest pain.

The stakes have been high for many bitcoin holders this week — nearly 50% of the bitcoin supply is at a loss and miners are sending more bitcoin to exchanges.

Even some of the biggest bitcoin investors, notably MicroStrategy, have had to defend their belief in bitcoin as prices tumble.

With a price target as low as $11,000, Cointelegraph examines how much more technically the market needs to fall to match the historical bottom area.

Unsettled holders will still exit the market

Despite bitcoin's slump to an 18-month low, its price action hasn't driven all the speculators out yet. According to the RHODL Ratio indicator of on-chain analytics resource LookIntoBitcoin founder Philip Swift, there should be more capitulations to come.

This is because historically, at macro price bottoms, the ratio between short-term holders and long-term holders favors the latter.

RHODL specifically uses the "realized upper limit HODL wave", and the RHODL ratio (RHODL Ratio) refers to the ratio between the 1-week RHODL band and the 1-2 year RHODL band.

Essentially, once RHODL enters the green zone, it means that capitulation has peaked and a price bottom is imminent or already established. Data from on-chain analytics firm Glassnode shows that, so far, RHODL has not entered its green zone.

Bitcoin RHODL Ratio Chart Source: Glassnode

Not enough holders underwater

It seems like the entire Bitcoin market is in the red, but above $20,000, many are clinging to what may be modest gains, hoping for a bounce.

On-chain analytics platform CryptoQuant revealed that as of June 16, only 46% of the total BTC supply was in the red.

The data is impressive in itself, but not enough to call it a macro capitulation event when historical patterns are taken into account.

According to CryptoQuant, at least 60% of the supply would need to incur unrealized losses to be called a capitulation — as was the case in March 2020, late 2018, and earlier.

Chart of % of Bitcoin supply in the red Source: CryptoQuant

CryptoQuant CEO Ki Young Ju pointed to the significance of BTC/USD returning to its realized price last week. This event, two years in the making, means that the spot price will be lower than the average price of all bitcoins when they last moved.

“Have been waiting for this moment for two years since the big sell-off in March 2020,” he commented at the time.

Miners Don't Capitulate Despite 'Amazing' Bitcoin Inflows to Exchanges

Even though bitcoin miners may be producing closer to $30,000 rather than $20,000 in production costs, they haven't started selling hoarded bitcoins to cover costs. Cointelegraph reported that Bitcoin is flowing into exchanges at the fastest pace in seven months.

Bitcoin’s network hashrate has yet to take a serious plunge, which is common in times of high price pressure.

The absence of this trend is confirmed by the Hash Ribbons indicator created by asset manager Capriole CEO Charles Edwards.

Hash Ribbons uses the 30-day and 60-day moving averages of hashrate to determine when miner capitulation will occur. Once the rising 30-day moving average crosses above the 60-day moving average, the "worst" can be considered over as miners have returned to work.

So far, this crossover has not happened, which historically means that the greatest pain may lie ahead.

Bitcoin Hash Ribbons Chart Source: Glassnode

“The amount of bitcoin miners are sending to exchanges is impressive,” economist, trader and entrepreneur Max Krueger said this week of miner activity.

"Many miners will be deep in the immature BTC, and yesterday's panic in anticipation of Bitcoin's price falling below $20,000 is justified."