Several factors have contributed to making the current cryptocurrency bear market the worst ever recorded.. Most bitcoin (BTC) traders are underwater and still selling at a loss, according to Glassnode.
Saturday’s report from blockchain analytics firm Glassnode, titled “A Bear Market of Historic Proportions,” outlines how Bitcoin’s current drop below the 200-day MA, negative realized price deviation, and realized net losses have all conspired to make 2022 the worst year in bitcoin’s history.:
“In the midst of this, both bitcoin and Ethereum have traded below their all-time highs from the previous cycle, which is a first in history.”
The first and most obvious indication of a bear market is when the bitcoin (BTC) spot price falls below the 200-day MA and an even more extreme scenario, the 200-week MA. To highlight how rare the current price levels are, Glassnode showed that during the 2022 bear market, Bitcoin has fallen below the mid-level of the 200-day MA..
Glassnode also showed that going below 0.5 the Mayer Multiple (MM) is an exceedingly rare occasion that hasn’t happened since 2015. The MM takes into account price swings above and below the 200-day MA to show overbought or overbought conditions. oversold. The report says: “Only 84 of 4160 trading days (2%) have seen a closing MA value below 0.5:”
“For the first time in history, the 2021-22 cycle has recorded a lower MM value (0.487) than the previous cycle low (0.511).”
Confirming the severity of the current market conditions is the drop in the spot price below the realized price, which has forced traders to increasingly sell their coins at a loss.. Glassnode noted that such a cascading effect is “typical of bear markets and market capitulations.”
glassnode said that Cases of spot prices trading below realized price are rare, noting that this is only the third time it has happened in the last six years and the fifth time it has happened since bitcoin launched in 2009.:
“Spot prices are currently trading at an 11.3% discount to realized price, meaning the average market participant is underwater.”
The rarity of this event is illustrated by the Glassnode model, which shows that on only 13.9% of bitcoin trading days have spot prices fallen below realized prices.
These conditions are compounded by investors locking in their losses in the largest cryptocurrency by market cap. When bitcoin dipped below the $20,000 mark in June 2022, Glassnode wrote that BTC investors locked in “the largest daily realized dollar loss in history.”:
“Investors collectively locked in a -$4,234 million loss in a single day, which is a 22.5% increase from the previous record of $3,457 million set in mid-2021.”
Considering all the negative metrics, Glassnode assesses that the market is in the midst of a capitulation event.. Cointelegraph corroborated this assessment on Friday noting that miners have started selling their holdings, which is another indicator that capitulation has taken place. Such events usually signify the lowest price range of a cycle.
BTC is currently down 70% from its November 2021 high, trading at $21,207according to CoinGecko.
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