Why Bitcoin traders remain long despite $317M in daily BTC losses

Bitcoin [BTC] selling pressure intensified as realized losses widened to a 3D-SMA of –$317 million per day, reflecting exits from distressed holders.

As liquidity weakened, profit-taking opportunities narrowed, forcing newer entrants to sell at losses, which deepened net outflows.

Earlierpositive prints, reflecting sustained profitability during the broader uptrend phase.

Sharp spikes interrupted these positive periods, driving realized profits higher as investors sold into market euphoria and elevated leverage conditions.

Source: Glassnode/X

Such spikes often aligned with local price tops, as market participants aggressively locked in gains.

This transition now mirrors December 2022, when cascading liquidations and credit stress pushed realized losses below –$300 million per day.

At that point, forced selling dominated, while weak hands exited under tightening liquidity conditions. Thereafter, price stabilized gradually, supported by patient accumulation and balance sheet repair.

Loss of momentum now appears to be stabilizing, as recent downside spikes are becoming smaller and less frequent.

However, persistent sub-zero readings still signal ongoing capitulation, where supply continues transferring to stronger, conviction-driven holders.

Heres why capitulation is deepening

Profitability continues to reset as realized losses expand across distribution phases, reinforcing persistent sell-side pressure.

Peak realized losses now approach prior cycle extremes, with single-day prints exceeding $5 billion, rivaling late-2022 capitulation levels.

Source: Glassnode/X

As these peaks emerge, market structure weakens, while confidence and spot demand deteriorate in parallel. Losses as a share of market cap are also rising, signaling broader value destruction rather than isolated holder distress.

This matters because higher proportional losses amplify balance sheet stress across cohorts.

Source: Glassnode/X

Leverage crowding builds as Bitcoin long bias intensifies

Long positioning is building across the market as the aggregate Long/Short Ratio trends higher, reflecting rising directional exposure.

However, the increase was not gradual; instead, it formed through sharp, inconsistent spikes, signaling reactive rather than stable conviction.

Source: X

At the same time, leverage concentration is thickening rather than dispersing, raising systemic liquidation sensitivity. As traders add longs into a weakening price structure, positioning reflects a denial of broader downside risk.

Liquidation bands now cluster tightly below recent ranges, meaning modest drawdowns could trigger cascading long squeezes. Funding and Open Interest trends further suggest re-leveraging, not healthy deleveraging, within an active downtrend.

In summary, traders are facing increasing pressure to sell, as they are heavily invested and at risk of losing more money.

Final Thoughts

• Capitulation pressure is growing because the losses traders are experiencing are similar to those in previous downturns.

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