Identifying Seller Exhaustion Across Multiple Timeframes

@Sakura please summarize this article, thanks uwu.

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TLDR :cherry_blossom:

This article introduces a new framework to assess seller exhaustion across multiple timeframes and investor cohorts during a Bitcoin bull market.

Key Points :dizzy:

  • Analyzes the Realized Loss of Long-Term Holders (LTHs) and Short-Term Holders (STHs) to identify inflection points during sell-off events.
  • Utilizes the newly released Breakdown by Age metrics to profile seller exhaustion across day trader and weekly-monthly investor cohorts.
  • Employs onchain metrics like MVRV Ratio, SOPR, and Realized Loss to gauge the unrealized and realized losses of the targeted investor classes.
  • Aims to identify points of oversold conditions where a majority of the sellers have likely sold.

In-depth Summary :thought_balloon:

The article starts by examining the Realized Loss for both Long-Term Holders (LTHs) and Short-Term Holders (STHs). It notes that losses taken by LTHs mostly occur around macro cycle downturns, while losses are typically locked in by recent buyers throughout all phases of the market.

The authors then introduce a framework to identify periods of seller exhaustion during corrections and consolidations within a dominant bull trend. They define Seller Exhaustion as a point of oversold conditions, where a majority of the sellers who are likely to sell have done so.

To capture this effect, the article utilizes the newly released age breakdown metrics to isolate two distinct sets of investors from within the STH cohort: Daily Traders (24hr Cohort) and Weekly-Monthly Swing Traders (1d-1m Cohort). It then employs three profit/loss metrics - MVRV Ratio, SOPR, and Realized Loss - to assess the severity of the financial pressure these investor cohorts are experiencing.

For the Daily Trader cohort, the analysis shows that the MVRV Z-Score, SOPR Z-Score, and Realized Loss Z-Score can be used to identify points of micro-capitulation and large sell-side pressure. For the Weekly-Monthly Trader cohort, the metrics indicate when significant unrealized losses have transferred up to the larger 1d-1m age band and when realized losses have been locked in.

ELI5 :lollipop:

This article looks at how different types of Bitcoin investors (day traders and weekly/monthly traders) are affected by price changes. It uses special metrics to find the points where these investors have sold a lot of their Bitcoin, which can help identify when the market is reaching a bottom and might start going up again.

Writer’s Main Point :star2:

The main point of the article is to introduce a new framework that uses on-chain data to identify points of seller exhaustion across different investor cohorts during a Bitcoin bull market. This can help analysts and investors better understand market dynamics and potential inflection points.

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