2022 Bear market could be the most significant yet
Hello dear friends.
As we already know, the bearish cycle that the market has experienced this 2022 has had a major impact on the cryptocurrency industry, and according to a recent report by the analytics firm Glassnode, it has so far proven to be the most significant with respect to previous cycles.
The current bear cycle has proven to be historic. Source: edited powerpoint image, original from pixabay.com.
And there is no doubt that, so far this year, this 2022 has faced cryptoassets has faced significant challenges, and while bonds and stocks have also struggled, the cryptocurrency industry seems to have faced the worst difficulties, or as this Glassnode report refers to it, it has been a Bear of Historic Proportions.
The analyst firm begins its report by arguing that it has been a difficult year for Bitcoin and Ethereum, given the force and speed with which the valuation of these assets has been hit, causing a large scale of capital destruction.
As mentioned, cryptoassets are struggling under increasingly strict monetary conditions. Looking at the global market capitalization chart, from a peak of nearly $3 trillion at the end of last year, cryptocurrencies have lost ground and are currently struggling to maintain close to $1 trillion in total market capitalization.
Total cryptocurrency market cap. Fuente: Coinmarketcap.
According to the report, rising inflation and tightening liquidity in the economy have had serious effects on an over-leveraged ecosystem such as cryptocurrencies. And while it is not news that Bitcoin is trading today below the highs achieved last year, the problem is that this has plunged 2021 and 2022 investors into unrealized losses, installing a kind of financial pain in the market.
In the report we can see that it starts by assessing the scale and duration of the current Bitcoin price decline compared to the bear cycles of 2015, 2018 and 2019, according to the report, bear cycles have historically settled with BTC price declines of between 75% and 84% from the all-time high (ATH), having durations of 410 days in 2015, 362 days in 2018 and 260 days in 2020, then, with the current 74% reduction from the November 2021 ATH already having a duration of 227 days, it is concluded in the report that this bear market is within historical proportions.
Bitcoin: Price Drawdown from ATH. Screenshot taken from glassnode.com.
Another metric used in the report has been the Mayer Multiple index, with which the report details that the current fall of the Bitcoin price below the 200-day moving average (MA) has made this one of the worst years for Bitcoin. And according to the graph of this index, we can see that the BTC currently registers a value of the Mayer Multiple index of 0.478, a value less than the minimum of the previous cycle, which was 0.511.
Bitcoin: Mayer Multiple. Source: Screenshot taken from glassnode.com.
Based on these and other metrics analyzed, the report closes by summarizing that the 2021-22 bear market is one of the most significant in history, due to the significant decline in capital and the magnitude of losses realized by investors.
Thanks for coming by to read friends, I hope you liked the information. See you next time.
