Market Wrap: Cryptos and Stocks Mixed Amid Bearish Sentiment

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Bitcoin (BTC) struggled to make a decisive move above or below $30,000 on Tuesday. The cryptocurrency appears to be stabilizing, although sentiment among traders remains bearish.

Some alternative cryptos (altcoins) underperformed bitcoin on Tuesday, which indicates a lower appetite for risk among short-term traders. For example, Decentraland's MANA token was down by 3% over the past 24 hours, compared with BTC's flat performance over the same period. Still, some alts gained on Tuesday such as Litecoin's LTC, which was up by 4%.

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Stocks were also mixed on Tuesday while the Chicago Board Options Exchange's CBOE Volatility Index (VIX), a popular measure of the stock market's expectation of volatility based on S&P 500 index options, has declined for four consecutive trading sessions.

Further, from a technical perspective, global equity markets appear to be oversold with initial signs of downside exhaustion, which could keep short-term buyers active over the next week. A similar set-up appeared on bitcoin's daily chart, so long as the $30,000 price level is maintained.

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Realized losses add up

Last week's sell-off triggered a spike in realized losses among bitcoin holders.

The chart below shows the realized loss metric relative to the realized market cap, which reached its highest level since the crypto sell-off in May of last year. Typically, a spike in losses occurs during the beginning or late stage of a bear market, similar to 2018 and 2019.

A loss occurs when BTC's market price falls below the average bitcoin holders' cost basis, which is recorded on the blockchain. The realized price (aggregate cost basis) is calculated by dividing the sum of all coin values at the time when they were last moved, by the circulating supply, according to Glassnode.

Currently, the realized price is around $23,000 and $24,000, which could be an important support level for BTC. In previous bear market cycles, however, BTC can trade below the realized price for about 100 days before buyers start to accumulate long positions.

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