Glassnode: Reveals new metrics to identify seller fatigue over multiple time periods
Understanding seller burnout
Cryptocurrency market analytics firm Glassnode Insights has introduced a new framework for assessing seller fatigue over multiple time periods. Using Glassnode’s new Breakdown Metrics, the framework allows isolating significant unrealized losses and investor surrender points.
During bull markets, long-term investors are typically more profitable. Therefore, the main source of realized losses comes from the short-term holder population, which can provide information about inflection points during selling events.
The new framework profiles seller fatigue across day trader and weekly monthly investor populations. It uses on-chain metrics to measure response to market downturns, assessing both unrealized and realized losses for the target investor class.
Building a seller burnout framework
This framework is designed to identify inflection points during corrections and consolidations within prevailing bullish trends. Seller exhaustion is defined as the point in an oversold situation where the majority of sellers with the potential to sell have done so. This can help establish local floors.
The framework uses three profit and loss indicators to establish the severity of the pressures investors are experiencing. The MVRV ratio evaluates the unrealized gains and losses held by investors in a cohort. Realized loss separating USD denominated size losses fixed by SOPR cohort, which evaluates the average P&L size fixed to the cohort.
Day Trader and Weekly-Monthly Trader
The Daily Trader group is the fastest moving group and the most sensitive to spot prices, reacting almost instantly to any fluctuations in price action. Weekly-monthly traders, on the other hand, are less price sensitive than the day trader group, but are more likely to experience volatility as spot prices fluctuate around their cost basis during holding time.
The new metrics allow for a comprehensive analysis of these different populations, providing valuable insights into market dynamics and helping identify periods of seller burnout.
conclusion
On-chain data provides analysts and investors with an incredible level of transparency into the positioning, incentives, and behavior of various market participants. Glassnode’s new analytical indicators allow you to isolate individual subsets of investors, helping you identify micro-capitalization points that tend to accompany local market lows. This can help investors better understand and predict market movements.
Disclaimer: This article does not provide investment advice. All data is provided for informational and educational purposes only. You should not make any investment decisions based on the information provided herein, and you are solely responsible for your investment decisions.
Image source: Shutterstock
. . .
tag
