Visualizing how Bitcoin on-chain yearly Profits and Losses played out since 2017
It wouldn’t be wrong to say that the preceding 24 months have been a story of two opposite years — when it comes to broader financial markets. The monetary policy authorities moved from an ultra-accommodative credit environment to an extremely tight one. The central banks have embarked on a very aggressive tightening cycle. This has literally sucked the life out of risky assets, most prominently cryptocurrencies.
The chaotic 2022 seems to be winding down on a very quiet note. This is evident from Bitcoin’s price move. According to crypto analytics firm Glassnode, BTC's volatility is currently at multi-year lows of 22% (1 week), and 28% (2 weeks), making for the lowest volatility regime since Oct 2020. Crypto future volumes also remain depressed — Both BTC and ETH markets are currently trading similar volumes between $9.5B and $10.5B per day.
Sufficed to say that massive tightening by monetary authorities has had a pretty negative impact on Bitcoin and the associated cryptos. Add to that two stellar collapses in the Cryptoverse and you have for yourself a 180-degree turn in Cryptocurrencies. Today’s chart above looks at the yearly sum of profits and losses in Bitcoin since 2017.
As is evident in the chart, the latest bull and bear peak — both have been the highest on record. First, the loose monetary policy era of 2020–21 led Bitcoin investors to post on-chain yearly profits of $455 Billion. The peak was hit soon after the November all-time high. Then came the bear market regime, which translated into massive losses for Bitcoin.
The premier crypto posted $213 Billion in realized losses — 46.8% of the 2020–21 bull profits, which is very similar in relative magnitude to the 2018 bear, where the market gave back 47.9%. Long-term investors (Hodlers), saw two of the largest relative loss spikes in history. Through November, LTH losses peaked at -0.10% of the market cap per day, comparable in scale only to the 2015 and 2018 cycle lows. All eyes are now on 2023.
Originally Published on Medium
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