Solana Enters Bear Territory: Realized Loss Now Outweighs Profit
On-chain information exhibits the Solana Realized Profit/Loss Ratio has dipped into the loss-taking zone just lately, an indication that SOL liquidity has thinned.
Solana Liquidity Back At Levels Associated With Bear Markets
According to information from on-chain analytics agency Glassnode, Solana liquidity has just lately contracted to ranges which can be usually witnessed in a bear market. There are some ways “liquidity” of a cryptocurrency might be assessed, however right here, Glassnode has used the Realized Profit/Loss Ratio.
This indicator measures, as its title already implies, the ratio between the quantity of revenue and loss that the SOL traders as a complete are realizing via their transactions.
The metric works by going via the transaction historical past of every coin being bought on the community to see what value it was final moved at. If the earlier transaction value was lower than the newest promoting value for any token, then the indicator considers its sale to have realized a web acquire. Similarly, the metric provides transactions to the loss-taking class within the reverse case.
The precise quantity of revenue or loss realized in any switch is of course equal to the distinction between the newest value and final promoting worth. The indicator provides up this worth for each classes and determines the ratio.
Now, right here is the chart shared by the analytics agency that exhibits the pattern within the 30-day transferring common (MA) of the Solana Realized Profit/Loss over the previous few years:
As displayed within the above graph, the Solana Realized Profit/Loss witnessed a pointy spike in the course of the value rally in September. This means that revenue taking noticed an explosion. The indicator maintained at high ranges for some time, however following the worth peak in October, its worth went downhill quick.
In November, the Realized Profit/Loss breached beneath the 1 mark as SOL plummeted. A worth lower than 1 on the metric implies loss realization is outpacing revenue taking. Since this breakdown, the indicator has solely gone decrease contained in the loss-taking area, an indication investor capitulation has solely been turning into extra dominant.
Glassnode has famous that the pattern alerts “liquidity has contracted again to ranges usually seen in deep bear markets.” During the 2022 bear market, Solana remained in these situations for a number of months earlier than its value discovered a backside.
It now stays to be seen whether or not the low liquidity will even persist for the cryptocurrency this time, or if the autumn into the loss area is just a brief one for the indicator.
SOL Price
Solana surged to $144 on Tuesday, however the coin has seen a fall again to $138.