2022 Bear Market Has Been The Worst On Record, According To Glassnode

2022 bear market has been the worst on record

As most Bitcoin traders remain underwater and continue to sell at a loss, according to Glassnode, several factors have combined to making the current crypto bear market the worst ever recorded.

In its report from Saturday, “A Bear of Historic Proportions,” blockchain analysis company Glassnode explains how Bitcoin’s recent decline below the 200-day moving average (MA), negative deviation from realized price, and net realized losses have combined to make 2022 the worst year in the cryptocurrency’s history: “In the midst of this, Bitcoin and Ethereum have both traded below their previous cycle ATHs which is a first in history.”

When the spot price of Bitcoin drops below the 200-day MA and, in a more extreme case, the 200-week MA, it is the first and most clear sign of a bear market. Glassnode showed that during the 2022 bad market, Bitcoin has gone below half the 200-day MA level, demonstrating how uncommon the present price levels are.

Additionally, Glassnode showed that the Mayer Multiple (MM) hasn’t fallen below 0.5 since 2015, which is an extremely unusual occurrence. To display overbought or oversold circumstances, the MM takes into account price moves above and below the 200-day MA. Only 84 out of 4160 trading days (2%) had a closing MM value below 0.5, according to the report.

“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).”

The fact that the spot price has fallen below the realized price, forcing dealers to sell their coins at a loss more frequently, confirms the severity of the present market circumstances. Such a cascade effect, according to Glassnode, is “typical of bear markets and market capitulations.”

Glassnode said that instances where spot prices trade below the realized price are uncommon, saying that this is just the third incident in the previous six years and the fifth instance since the beginning of Bitcoin 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.”

Only 13.9% of all Bitcoin trading days have seen spot prices fall below realized prices, according to Glassnode’s model, highlighting how uncommon this occurrence is.

Investors locking in their losses on the biggest cryptocurrency by market size worsens these circumstances. According to Glassnode, BTC investors suffered “the largest daily USD denominated realized loss in history” when Bitcoin went below the $20,000 threshold in June 2022.

“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.”

Glassnode determines that the market is experiencing a capitulation event after taking into account all the unfavorable metrics.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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