2022 bear market has been the worst on record — Glassnode

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Several factors have contributed to the current crypto bear market being the worst ever since most bitcoin (BTC) traders are underwater and continue to sell at a loss, according to Glassnode.

Saturday’s report by blockchain analyst Glassnode titled “A Bear of Historic Dimensions” shows how Bitcoin’s current drop below the 200-day moving average (MA), negative deviation from realized price and net realized losses have conspired to make 2022 the worst in history Bitcoin:

“In the midst of this, Bitcoin and Ethereum both traded at less than ATHs prior to the first session in history.”
The first and most obvious indicator of a bear market is when the spot price of Bitcoin (BTC) drops below the 200-day moving average and the most extreme scenario, the 200-week moving average. To highlight just how rare the current price levels are, Glassnode showed that during the 2022 bear market, bitcoin fell below half the level of the 200-day moving average.

Bitcoin price drops below 0.5mm for the first time since 2015: Glassnode
Glassnode also showed that a drop below 0.5 of the Mayer Multiple (MM) is a very rare event that has not occurred since 2015. MM factors in prices above and below the 200-day moving average to show overbought or oversold conditions. The report states, “Only 84 out of 4,160 trading days (2%) recorded a closing MM value of less than 0.5:”

“For the first time in history, the 2021-22 cycle recorded a MM value lower (0.487) than the previous cycle’s low (0.511).”
Confirming the severity of current market conditions is the drop in the spot price below the realized price, forcing traders to increasingly sell their coins at a loss. Glassnode notes that such a chain effect is “typical of bear markets and market capitulation.”

Cases of spot prices trading below the actual price are uncommon, Glassnode said, noting that this is only the third time this has happened in the past six years and the fifth since Bitcoin was launched in 2009:

“Spot prices are currently trading at 11.3% off the realized price, which indicates that the average market participant is now underwater in their position.”
The rarity of this event is illustrated by the Glassnode model which shows that only 13.9% of all Bitcoin trading days saw spot prices fall below realized prices.

Only 13.9% of trading days saw spot prices below the real price: Glassnode
These conditions are exacerbated by investors locking in their losses on the largest cryptocurrency by market capitalization. When the price of bitcoin plunged below the $2022 level in June 2022, Glassnode wrote that bitcoin investors locked in “the largest realized daily loss in US dollars in history”:

“Collectively, investors lost $4.234 billion in one day, which is a 22.5% increase from the previous record of $3.457 billion set in mid-2021.”

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