Several components have contributed to creating the present crypto bear market the worst ever recorded as most Bitcoin (BTC) merchants are underwater and proceed to promote at a loss, in accordance with Glassnode.
Blockchain evaluation agency Glassnode’s Saturday report titled “A Bear of Historic Proportions” outlines how Bitcoin’s present dip beneath the 200-day shifting common (MA), damaging deviation from realized value and web realized losses have conspired to make 2022 the worst in Bitcoin’s historical past:
“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 blatant indication of a bear market is when the spot value of Bitcoin (BTC) falls beneath the 200-day MA and an much more excessive situation, the 200-week MA. To spotlight how uncommon the present value ranges are, Glassnode confirmed that through the 2022 bear market, Bitcoin has fallen beneath half the 200-day MA degree.
Glassnode additionally demonstrated that falling beneath 0.5 the Mayer Multiple (MM) is an exceedingly uncommon event that hasn’t occurred since 2015. The MM components in value adjustments above and beneath the 200-day MA to indicate overbought or oversold situations. The report states, “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 severity of present market situations is the spot value falling beneath the realized value, which has pressured merchants to more and more promote their cash at a loss. Glassnode famous that such a cascade impact is “typical of bear markets and market capitulations.”
Glassnode stated cases when spot costs commerce beneath the realized value are unusual, noting that that is solely the third time this has occurred within the final six years and the fifth time it’s occurred 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 occasion is illustrated by Glassnode’s mannequin exhibiting that simply 13.9% of all Bitcoin buying and selling days have seen spot costs dip beneath realized costs.
These situations are exacerbated by traders locking of their losses on the biggest crypto by market cap. When Bitcoin fell beneath the $20,000 mark in June 2022, Glassnode wrote that BTC traders 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 of the damaging metrics, Glassnode assesses that the market is within the midst of a capitulation occasion. Cointelegraph corroborated this evaluation on Friday by mentioning that miners have began promoting their stacks, which is one other indicator that capitulation has taken place. Such occasions usually signify the underside value vary of a cycle.
Related: 5 indicators merchants can use to know when a crypto bear market is ending
BTC is at the moment down 70% from its November 2021 excessive, buying and selling at $21,207, in accordance to CoinGecko.