“When will it end?” is the question that haunts the minds of investors who have endured the current crypto winter and have witnessed the disappearance of multiple protocols and investment funds in recent months.
This week, Bitcoin (BTC) finds itself once again touching resistance at its 200-week moving average and the real challenge is whether it can push higher in the face of multiple headwinds or whether the price will trend lower again. in the range that has been trapped since early June.
According to the most recent bulletin from on-chain market intelligence firm Glassnode, “duration” is the main difference between the current bear market and previous cycles, and many on-chain metrics are now comparable to these historical declines.
One metric that has proven to be a reliable indicator of bear market lows is realized price, which is the value of all Bitcoin at the price it was purchased divided by the number of BTC in circulation.
As the chart above shows, with the exception of the accelerated crash in March 2020, Bitcoin has traded below its realized price for a long period of time during bear markets.
glassnode said:
“The average time below realized price is 197 days, compared to the current market with only 35 days on the clock.”
This would suggest that the current calls for an end to the crypto winter are premature because historical data suggests the market still has several months of flat price action ahead of the next major uptrend.
Will the fund be closer to $14,000?
When it comes to what traders should watch for as the end of winter means, Glassnode highlighted Delta pricing and Balance pricing as “on-chain pricing models that tend to attract spot prices during late bearish legs.” .
As shown in the chart above, previous bear market lows were established after a “short-term wick to Delta price”, which is highlighted in green. A similar move in the current market would suggest a BTC bottom near $14,215.
These bearish periods also saw the price of BTC trade in an accumulation range “between the balanced price (range low) and the realized price (range high)”, which is where the price is currently.
One of the classic signs that a bear market is coming to an end has been a major capitulation event that depleted the last remaining sellers.
While some are still debating whether or not this has happened, Glassnode highlighted on-chain activity during the June crash to $17,600 as a possible sign that capitulation has taken place.
At the time BTC fell to $17,600, there was a total volume of 9.216 million BTC with unrealized losses. Following the capitulation event on June 18, a month of consolidation, and a price rally to $21,200, this volume has dropped to 7.68 million BTC.
glassnode said:
“What this suggests is that 1.539 million BTC was last traded (on a cost basis) between $17,600 and $21,200. This indicates that about 8% of the circulating supply has changed hands in this price range. “.
Further proof that the capitulation has already taken place was the “staggering volume of BTC” that locked in a loss made between May and July.
The Terra crash triggered a total realized loss of $27.77 billion, while the June 18 crash below the 2017 all-time cycle high resulted in a total realized loss of $35.5 billion.
Is this the end of the bear market?
One final metric that suggests capitulation has already occurred is the Adjusted Output Profit Ratio (aSPOR), which compares the value of outputs at the time they are spent to the time they are created.
According to Glassnode, when returns are declining (as depicted by the blue arrows), investors are realizing huge losses that ultimately lead to “a final capitulation cascade moment,” which is highlighted in red.
According to Glassnode:
“The market eventually reaches seller exhaustion, prices start to recover and investor pain starts to subside.”
To check that the capitulation has indeed occurred and that the accumulation is underway, Glassnode indicated that ideally, the aSOPR value should bounce back above 1.0.
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