Analysts See Signs of Bitcoin Seller Exhaustion

After Bitcoin's decline of more than 10% from the previous high, the Seller Exhaustion Model indicator has returned to bearish period values. Analyst Darkfost suggests a potential easing of selling pressure but warns that new demand is necessary for BTC's recovery.

How the Seller Exhaustion Model Works

On November 4, Darkfost reported that the Seller Exhaustion Model had dropped to low historical values. According to his assessment, a significant portion of short-term profits may have already been realized, reducing the incentives to sell.

The methodology was proposed by ARK Invest and David Puell in 2021. The indicator is calculated as the product of the share of Bitcoin supply in profit and 30-day volatility. A low value may reflect a reduction in the profitable share of coins, a decrease in price fluctuations, or both factors. It does not measure the number of sellers and does not guarantee a bottom has been reached.

In past cycles, similar conditions sometimes coincided with the formation of local lows. However, according to Darkfost, a reduction in sales is insufficient without sustainable buyer demand.

Why Trader Realized Price Matters

CryptoQuant analyst Trader_Gemini highlighted another benchmark – Trader On-chain Realized Price. It reflects the average estimated cost of Bitcoins that last moved on the network from one to three months ago. This is not the exact purchase price of each owner: transferring coins does not always mean a transaction.

According to the analyst, on November 1, the indicator was $77,140 with the market price of BTC around $77,880. By November 3, the cost estimates for this group approached $77,700. The indicator changes, so it cannot be considered a constant boundary.

If BTC is held above the realized cost, this group of coins generally remains profitable. A drop below it increases unrealized losses. When the price returns to this level, some holders may sell coins to break even, and previous support can turn into resistance.

What Will Confirm Recovery

The coincidence of two indicators does not serve as an independent buy signal. For assessing potential recovery, it is important to maintain the price above the cost of recent participants, buyer activity in the spot market, and a reduction in sales. Without demand confirmation, the correction may continue even if the model shows seller exhaustion.