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Glassnode on Bear Market 2022: Worst Since Bitcoin Launch

 


Several factors have contributed to making the current crypto bear market the worst it has ever been. Most Bitcoin ( BTC ) traders are down and continue to sell at a loss, data from Glassnode shows.


Blockchain analytics firm Glassnode released a report on Saturday titled "A Bear of Historic Proportions." This shows that Bitcoin 's current dip below the 200-day moving average, negative deviation from the realized price, and net realized losses have resulted in 2022 becoming the worst in Bitcoin's history:


“Amidst this development, Bitcoin and Ethereum are below their all-time highs from the previous cycle. This has never been seen before.”

The first and most obvious sign of a bear market is when the Bitcoin (BTC) spot price falls below the 200-day MA, or even below the 200-week MA, assuming an even more extreme scenario. To illustrate the rarity of current price levels, Glassnode showed that during the 2022 bear market, Bitcoin fell below half of the 200-day MA level.

Bitcoin price below half of MM: Glassnode for the first time since 2015

Glassnode has also shown that a drop below half the Mayer multiple (MM) is an extremely rare event, not having happened since 2015. The MM accounts for price moves above and below the 200-day ma, indicating an overbought or oversold level. The report states: "Only 84 out of 4160 trading days (2 percent) did the price fall below half of the MM."


"For the first time in history, the 2021-22 cycle has recorded a lower MM value (0.487) compared to the previous cycle low (0.511)."

Evidence of how difficult the current market conditions are is the fall in the spot price below the realized price. This is forcing more and more traders to sell their coins at a loss. Glassnode noted that such a cascading effect is "typical of bear markets and market capitulations."


Glassnode stated that it is unusual for the spot price to fall below the realized price. This is only the third time in the last six years and the fifth time since Bitcoin was launched in 2009:


"Spot prices are currently 11.3 percent below realized price. This signals that average investors are now in the red with their position."

Glassnode illustrates how rare this event is with a model that shows that the spot price fell below the realized price on only 13.9 percent of all trading days.


Compounding these conditions, investors have seen losses in the largest cryptocurrency by market cap. When Bitcoin fell below $20,000 in June 2022 , Glassnode wrote that BTC investors suffered "the largest realized daily loss in USD in history":"


"Investors have recorded a loss of $4.234 billion in a single day, up 22.5 percent from the previous record of $3.457 billion set in mid-2021."

Glassnode concludes that the market is in a capitulation phase. Cointelegraph confirmed this assessment on Friday, noting that miners are beginning to sell their inventory . This is another indicator that a surrender has taken place. Such events often signal the bottom of a cycle.


According to CoinGecko, BTC is currently 70 percent down from its November 2021 peak at $21,207.

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