PlanB: 40% of Bitcoin is at a loss

Today PlanB released a chart where it indicates that currently 40% of existing Bitcoin would be at a loss. 

~40% of all 19M bitcoins are in loss (blue). Historically blue is a great “accumulation zone”. How long blue?
– Could be 1 month (Covid2020)
– or 2 months (2011)
– 6 months (2018/19)
– 9 months (2014/15)
Time will tell. Currently at 3 blue dots. Are you going to wait until green? pic.twitter.com/qKPrgebwjI

— PlanB (@100trillionUSD) July 25, 2022

In reality, this is only a guess, albeit based on real data, because the purchase price of every single Satoshi in existence is not really known. 

However, for each fraction of BTC, it is possible to know the exact date of the last transaction recorded on the Bitcoin blockchain in which it was involved, and to assume that the market price at that precise moment may more or less match the purchase price. 

Using this technique, there would turn out to be about 7.6 million BTC nowadays, and it can be assumed that they have been purchased over the years at a price higher than the current one of about $22,000. 

PlanB’s analysis shows the number of Bitcoin at a loss

Upon an initial superficial analysis, this may seem like a relatively small percentage, but among the remaining 11.5 million BTC, there are several that are now lost forever, because they are effectively unusable due to the loss of the private address keys on which they are stored, which are essential for them to be used. 

Since it is estimated that the lost BTC could be more than 3 million, it means that the BTC still in circulation bought at a price of less than $22,000 could be less than 8.5 million, not much more than the 7.6 million lost. 

PlanB also points out that in the past there has never been a significantly greater percentage than 40% of Bitcoin at a loss, and that when similar situations have occurred they have lasted only a few months. The longest period with 40% of BTC at a loss was the terrible bear market of 2014/2015, the one following the Mt.Gox bankruptcy, when it took a full 9 months for this metric to decline. 

This is only the 5th time in the entire history of Bitcoin that it has fallen to this level, with less than 60% of BTC in profit.  

As of now, this has already been going on for about three months, whereas twice in the past it lasted less, and twice it lasted longer. It is worth noting that both times when it lasted longer, it was during the two post-halving bear markets. The current one is the third post-halving bear market. 

Something like this is also found on the graph of the so-called realized price, based on the same kind of estimation. According to this graph, however, it has been less than a month and a half since the price of BTC has been below the realized price. In the bear market of 2014/2015, it was there for almost eleven months.