According to Glassnode, several factors have contributed to the current crypto bear market being the worst on record, as most Bitcoin traders are underwater and continue to sell at a loss.
A June 24 report by blockchain analytics firm Glassnode titled “A Bear of Historic Proportions” outlines Bitcoin’s current dip below its 200-day moving average (MA), negative deviation from actual price, and net realized How losses have conspired to make 2022 the worst year in Bitcoin history.
“For the first time in history, both Bitcoin and Ethereum traded below their previous cycle highs during this period.”
The first and most obvious sign of a bear market is when the spot price of Bitcoin (BTC) falls below its 200-day moving average and, in more extreme cases, its 200-week moving average. To underscore how rare the current price level is, Glassnode shows that during the 2022 bear market, Bitcoin has fallen below half of the 200-day moving average level.
Bitcoin price drops below 0.5 MM for first time since 2015 - Glassnode
Glassnode also shows that Mayer multiples (MM) below 0.5 are very rare and haven't happened since 2015. MM takes price changes above and below the 200-day moving average into account to indicate overbought or oversold conditions. The report stated that "out of 4160 trading days, only 84 (2%) had closing MM values below 0.5."
"For the first time in history, the MM value (0.487) for the 2021-22 cycle is below the previous cycle low (0.511)."
Spot prices fell below realized prices, forcing traders to increasingly sell tokens at a loss, confirming the seriousness of the current market conditions. Glassnode noted that this cascading effect is “typical of bear markets and market capitulation.”
Glassnode said it is uncommon for the spot price to be lower than the realized price, noting that this is only the third time this has happened in the past six years and the fifth since Bitcoin launched in 2009.
"Spot prices are currently trading 11.3% below realized prices, suggesting that common market participants are now trading at a low."
The rarity of the event is illustrated by Glassnode’s model, which shows that only 13.9% of Bitcoin trading days saw the spot price fall below the realized price.
Only 13.9% of the trading days the spot price was lower than the realized price. ——Glassnode
Those conditions were exacerbated by investors locking in losses in the largest cryptocurrency by market capitalization. When Bitcoin fell below the $20,000 mark in June 2022, Glassnode wrote that BTC investors locked in the "largest daily realized loss in USD terms in history."
"Investors lost a total of $4.234 billion in one day, a 22.5% increase from the record of $3.457 billion set in mid-2021."
Considering all the negative indicators, the Glassnode assessment market is in the midst of a capitulation event. Cointelegraph confirmed this assessment on June 24, noting that miners had begun selling their inventories, another indicator of capitulation. Such events usually signify a cycle bottom price range.
BTC is currently down 70% from its November 2021 high, trading at $21,207, according to data from CoinGecko.
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