Bitcoin Defies Bear Market Pattern with Shallow Market Stress
The 2023 bear market has shown some unique characteristics compared to previous bear markets. One key difference is that the Bitcoin price has never recorded a daily close below its realized price this cycle. This is a significant difference from the 2018-2019 and 2022-2023 bear markets, where Bitcoin traded at a realized price for months below. The aggregate Net Unrealized Profit/Loss (NUPL) remained positive throughout the cycle, indicating shallower market-wide stress than in prior bear markets.
Glassnode notes that the June low remained above the realized price, and if the price holds above the True Market Mean, the June low would be the shallowest of the three bear-market lows shown in the comparison. This suggests that the market has not experienced the same level of stress as in previous bear markets.
The report also highlights that the Percent Supply in Profit fell to approximately the level seen at the November 2022 low, meaning a similarly large share of coins was underwater. However, the scale of those losses was different, as the Net Unrealized Profit/Loss (NUPL) never turned negative, unlike in 2018 and 2022.
The largest long-term-holder supply cluster is at $84,000-$85,000, which marks a meaningful area of holder supply. However, this is not proof that those coins are profitable or that their owners will sell. The mean MVRV price at $96,700 is also a key level, as it is the Realized Price multiplied by Bitcoin's long-term average MVRV. This level is significant as it marks a point where the average holder's profit returns to its long-term norm.
The next major test for the market is at $95,000-$97,000, where options positioning and the mean MVRV price converge. Positive gamma around the $95,000 strikes reached its highest reading on the report's chart, while negative gamma built between spot and $92,000. Dealer hedging can accelerate price moves between spot and $92,000, then tend to dampen them near $95,000.