Analyst: Bitcoin's recent pullback has led to a record high in realized losses, potentially nearing a local bottom

BlockBeats News, February 21, Cryptocurrency analyst Michaël van de Poppe posted that "Bitcoin's recent pullback has led to a significant surge in current realized losses, reaching a historical high. This is one of the largest realized loss events in Bitcoin's history, comparable to the 2018 bear market crash, the March 2020 COVID-19 plunge, and the loss peak during the 2022 Luna/FTX collapse."

A large number of holders are engaging in capitulation-style selling, either panic selling or transferring their BTC while at a loss. This extreme realization of losses typically signifies market panic selling and forced liquidations. Historically, similar significant spikes in realized losses often occur near or at interim bottoms because it represents the clearing out of "weak hands" and highly leveraged positions.

It is worth noting that the Sharpe Ratio has dropped to the lowest level since the last bottom; the market is undergoing a massive capitulation event with a very high scale of realized losses; market sentiment is nearly at rock bottom. The only difference is that this round of Bitcoin has dropped only about 50% from its all-time high, not 80%. The bottom is near."