Yesterday morning, BTC suddenly dropped sharply, disrupting the original rebound rhythm and causing the slightly relieved market sentiment to become tense again. However, based on the data up to this morning, the EARL (Entity Adjusted Realized Loss) on December 1st was 820 million USD, far less than the 2.34 billion USD scale on November 21st (as shown in Figure 1).
On December 1st, the realized loss transferred to the exchange was 80 million USD, which is also less than the 320 million USD on November 21st, and lower than the loss scale on November 14th and 17th (as shown in Figure 2).
As I mentioned in my tweet on November 24th, although the scale of EARL on November 21st looked frightening, it should be the ceiling in the short term. As long as there are no continuous negative impacts, even if the price drops again, there is a good chance that panic losses can gradually decrease.
What we most hope to see is that EARL, during the price decline process, has waves lower than the previous ones, or a general decrease, which indicates that the panic selling has gradually been cleared, and this is one of the most important conditions for a short-term bottoming (see citation).
In simple terms, the clearing of panic selling does not necessarily mean we have hit the bottom immediately, but if it has not been cleared, it definitely is not the bottom. Because, I believe this is good data, at least indicating that the current situation is not sliding towards a worse direction.
