Some investors are worried that the recent market downturn might cause Bitcoin and Ethereum to collapse. The current bear market has been incredibly long and brutal, with valuations being severely hit. It's possible that 2022 will be the most significant bear year for Bitcoin since the inception of the digital asset.
Due to the various factors that affect the crypto market, the current bear market is considered the worst ever. According to Glassnode, many investors are still selling their assets despite the recent market volatility. Some have even referred to the current situation as the "coldest cryptocurrency winter."
In its report, Glassnode discussed the various factors that have affected the crypto market. The firm noted that the current bear market is the worst since the start of Bitcoin's history. It explained how the price of Bitcoin has dropped below the 200-day moving average, and the net realized losses have made 2022 the worst year for Bitcoin.
During this period, both Ethereum and Bitcoin have traded below their previous cycle ATHs, which is a first in the market's history. This has caused a huge portion of the market to enter unrealized loss. As a result, a growing number of investors are liquidating their assets, locking in record losses.
Indicators for bear market
The first sign of a bear market is when the price of Bitcoin falls below the 200-day moving average. This level is considered the first significant technical indicator of a bear market. In 2022, Bitcoin fell below 50% of the 200-day MA.
The scale and duration of the current bear market are similar to those of previous bear markets. For instance, the bear market lows were established from 2015 to 2019. The study also noted that these bear markets ranged from 260 to 410 days.
The Mayer Multiple is an infrequent occurrence when the price of a security falls below the 200-day moving average. It is used to identify possible oversold or overbought conditions. About 2% of the 4,160 trading days from 2015 to 2019 had a closing value of less than 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)," Glassnode's report said. "Only 84 out of 4160 trading days (2%) have recorded a closing MM value below 0.5."
The report also noted that the spot price of Bitcoin has dropped below the realized price, which further indicates the market's severity. Due to the decline, many investors and traders have been selling their assets to maintain their positions. According to the firm, the decline in the market is a typical sign of a bear market and a market capitulation.
The last three consecutive days have been the largest USD denominated Realized Loss in #Bitcoin history.— glassnode (@glassnode) June 19, 2022
Over $7.325B in $BTC losses have been locked in by investors spending coins that were accumulated at higher prices.
A thread exploring this in more detail 🧵
Current market situation
According to the latest data from CoinMarketCap, Bitcoin's live price is currently at $21,451.44. It has risen 0.12% in the past 24 hours, while the price of Ethereum has dropped 1.05%. The global market cap of cryptocurrencies has also decreased by 0.16%, to nearly $960 billion. During the past 24 hours, the global volume of Bitcoin has increased by over 20 million.
The report by Glassnode is significant for the cryptocurrency sector as it provides a comprehensive analysis of the various factors that affect the price of cryptocurrencies. It also noted that instances where the spot price of Bitcoin has dropped below the actual price are scarce. This marks the third time in the past six years that this has happened and the fifth time since Bitcoin's creation in 2009.