Analyst: The recent pullback in Bitcoin has led to record-high realized losses, possibly approaching a cyclical bottom.

On February 21, crypto analyst Michaël van de Poppe stated, “Bitcoin’s recent pullback has caused a significant surge in realized losses, reaching an all-time 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 peak losses during the Luna/FTX collapse in 2022. A large number of holders are capitulating—either selling at a loss or transferring their BTC while in a loss. Such extreme loss realizations typically indicate market panic selling and forced liquidations. Historically, similar large-scale increases in realized losses tend to occur near or at market bottoms, as they signal the complete clearing out of weak hands and highly leveraged positions. Notably, the Sharpe Ratio has fallen to its lowest level since the previous cycle bottom; the market is experiencing a massive capitulation event with extremely high realized losses; market sentiment has nearly hit rock bottom. The only difference this time is that Bitcoin has only declined about 50% from its all-time high, rather than 80%. The bottom is near.”