Glassnode: New Metrics Unveiled For Identifying Seller Exhaustion Across Multiple Timeframes

Understanding
Seller
Exhaustion

Crypto
market
analytics
firm
Glassnode
Insights
has
introduced
a
new
framework
for
assessing
seller
exhaustion
across
multiple
timeframes.
The
framework,
which
uses
Glassnode’s
new
Breakdown
Metrics,
allows
for
the
discrete
isolation
of
points
of
severe
unrealized
loss
and
investor
capitulation.

During
a
bull
market
regime,
long-term
investors
are
generally
highly
profitable.
Therefore,
the
dominant
source
of
realized
loss
originates
from
the
short-term
holder
cohort,
which
can
provide
information
on
inflection
points
during
sell-off
events.

The
new
framework
profiles
seller
exhaustion
across
day
trader
and
weekly-monthly
investor
cohorts.
It
uses
on-chain
metrics
to
assess
both
the
unrealized
and
realized
losses
of
the
targeted
investor
classes
as
a
gauge
for
their
response
to
market
downturns.

Establishing
a
Seller
Exhaustion
Framework

The
framework
is
designed
to
identify
inflection
points
during
corrections
and
consolidations
within
a
dominant
bull
trend.
Seller
Exhaustion
is
defined
as
a
point
of
oversold
conditions,
where
a
majority
of
the
sellers
who
are
likely
to
sell,
have
done
so.
This
can
help
establish
a
local
bottom.

The
framework
uses
three
profit/loss
metrics
to
establish
the
severity
of
the
pressure
investors
are
experiencing:
MVRV
Ratio,
which
assesses
the
unrealized
profit
or
loss
held
by
investors
within
the
cohort;
SOPR,
which
evaluates
the
average
magnitude
of
profit
or
loss
locked
in
by
the
cohort;
and
Realized
Loss,
which
isolates
the
USD
denominated
magnitude
loss
locked
in
by
the
cohort.

Daily
Traders
and
Weekly-Monthly
Traders

The
Daily
Trader
group
is
the
fastest
moving
cohort,
and
the
most
sensitive
to
the
spot
price,
reacting
near
instantaneously
to
any
and
all
fluctuations
in
price
action.
The
Weekly-Monthly
traders,
on
the
other
hand,
are
less
price
sensitive
than
the
Day
Trader
group,
but
are
also
more
likely
to
experience
volatility
as
the
spot
price
fluctuates
around
their
cost
basis
during
their
holding
time.

The
new
metrics
allow
for
a
comprehensive
analysis
of
these
different
cohorts,
providing
valuable
insights
into
market
dynamics
and
helping
to
identify
periods
of
seller
exhaustion.

Conclusions

On-chain
data
provides
analysts
and
investors
with
a
remarkable
degree
of
transparency
into
the
positioning,
incentives,
and
actions
of
various
market
participants.
The
new
breakdown
metrics
from
Glassnode
allow
for
the
isolation
of
individual
subsets
of
investors,
helping
to
identify
points
of
micro-capitulation
that
tend
to
accompany
local
market
lows.
This
can
help
investors
to
better
understand
and
predict
market
movements.

Disclaimer:
This
article
does
not
provide
any
investment
advice.
All
data
is
provided
for
information
and
educational
purposes
only.
No
investment
decision
shall
be
based
on
the
information
provided
here
and
you
are
solely
responsible
for
your
own
investment
decisions.

Image
source:
Shutterstock

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