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Glassnode seems disappointed as the 2022 bear market has been the worst on record

  • News
  • June 27, 2022
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On-chain analysis by Glassnode has recently shown that the current Bitcoin bear cycle is playing out as the worst one in history.

According to Glassnode, quite a lot of factors have contributed to making the current crypto bear market the worst ever recorded as most Bitcoin traders are underwater and continue to sell at a loss.

Glassnode, a Blockchain analysis firm, titled Saturday report  “A Bear of Historic Proportions”  that shows how Bitcoin’s current dip below the 200-day moving average (MA), negative unconventionality from realized price, and net realized losses have conspired to make 2022 the worst in Bitcoin’s history:

“In the midst of this, Bitcoin and Ethereum have both traded below their previous cycle ATHs which is a first in history.”

The first and most clear indication of a bear market is when the spot price of Bitcoin falls below the 200-day MA and an even more extreme scenario, the 200-week MA. To highlight the rare current price levels, Glassnode showed that during the 2022 bear market, Bitcoin has fallen below half the 200-day MA level.

Glassnode also established that falling below 0.5 the Mayer Multiple (MM) is an exceptionally rare occasion that hasn’t happened since 2015. The MM factors in price changes above and below the 200-day MA to show overbought or oversold conditions. The report emphasises, “Only 84 out of 4160 trading days (2%) have recorded a closing MM 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’s low (0.511).”

Confirming the harshness of current market conditions is the spot price falling below the realized price, which has forced traders to sell their coins at a loss. Glassnode claimed that such a force effect is “typical of bear markets and market capitulations.”

Glassnode said occasions, when spot prices trade below the realized price, are rare, noting that this is only the third time this has happened in the last six years and the fifth time it’s happened since Bitcoin’s launch in 2009:

“Spot prices are currently trading at an 11.3% discount to the realized price, signifying that the average market participant is now underwater on their position.”

The rarity of this event is demonstrated by Glassnode’s model showing that just 13.9% of all Bitcoin trading days have seen spot prices dip below realized prices.

These conditions are worsened by investors locking in their losses on the largest crypto by market cap. When Bitcoin fell below the $20,000 mark in June 2022, Glassnode wrote that BTC investors locked in “the largest daily USD denominated realized loss in history:”

“Investors collectively locked in a loss of -$4.234B in a single day, which is a 22.5% increase from the previous record of $3.457B set in mid-2021.”

Factoring in all the negative metrics, Glassnode evaluates that the market is in the midst of a capitulation event. Such events often signify the bottom price range of a cycle.

BTC is presently down 70% from its November 2021 high, trading at $21,207, according to CoinGecko.

 

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