The year 2022 has probably witnessed one of the worst bear markets, as it spares no one, not even the high-flying crypto market. According to Glassnode, most Bitcoin (BTC) traders are underwater and continue to sell at a loss. With inflation and tightening liquidity badly influencing the over-leveraged crypto ecosystem highlighted by Bitcoin (BTC) and Ethereum (ETH), both having traded below their previous cycle all-time highs (ATHs), a first in history, markets have plunged a "great proportion" into unrealized loss with all 2021-22 investors now underwater, according to a report.
In layman's terms, a bear market is that phase or situation when the stock market trends go downhill. To rephrase it professionally, a bear market is when there is a considerable deterioration of at least 20% or more. A downtrend in the major benchmark indices and index values falling dramatically indicates the bearish behavior.
A report compiled by blockchain analytics firm Glassnode states that as this financial pain sets in, a large number of investors are liquidating their holdings, locking in record realized losses.
Bitcoin goes down below half its 200 DMA
In the current bear market situation, Bitcoin prices have fallen below half its 200 DMA. DMA stands for Daily Moving Average. In simple terms, the daily moving average shows the arithmetical mean of the daily prices over a period of time. If 200 DMA is considered as a long-term mean, the Mayer Multiple (MM) records price deviations above and below to denote overbought or oversold conditions, respectively. 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). Only 84 out of 4160 trading days (2%) have recorded a closing MM value below 0.5.
Spot price falling below the realized price has increasingly forced traders to sell their coins at a loss. Glassnode noted that such a cascade effect is "typical of bear markets and market capitulations." Glassnode said instances, when spot prices trade below the realized price, are rare, noting that this is only the third time this has happened in the last six years and the fifth time it's happened since Bitcoin's launch in 2009
With the recent cryptocurrency market going downhill, some investors are worried that Bitcoin and Ethereum may not survive this crash. The current bear market has been long and deep, with valuations being hit severely and rapidly. The current crypto bear market is the worst ever due to numerous conditions in decentralized and centralized markets. Some are even referring to it as the “coldest cryptocurrency winter.”
Forecast for Ethereum and Bitcoin
According to CoinMarketCap, the present live Bitcoin rate is $21,451.44, with a trading volume of $20,965,630,024 in 24 hours. In the past 24 hours, Bitcoin has risen 0.12%. The current Ethereum price is 1,230.78 USD per ETH with a 24-hour volume of 13,264,972,878 USD. In the last 24 hours, Ethereum has dropped 1.05 percent. On the whole, the global crypto market cap was $962.95 billion over the previous day, a decrease of 0.16%.
“The next two years are going to be really rough,” says Avichal Garg, a managing partner at Electrical Capital, a crypto investment fund with more than $1 billion in assets. His basic principles on the industry’s promise haven’t changed. “New software developers are coming in, and we're seeing more and more high-quality founders. We see Web2 executives from Facebook and Google coming in at a faster clip,” he says. But one big factor has backers particularly nervous: “It's the first time that crypto and Web3 has existed in a macroeconomic bear-market environment, where there's potentially a recession happening next year,” Garg says.
Considering all the negative metrics, Glassnode assesses that the market is in the midst of a capitulation event. Cointelegraph confirmed this assessment on Friday by pointing out that miners have started selling their stacks, which is another indicator that capitulation has taken place. Such events often signify the bottom price range of a cycle.
The founder and CEO of BTC.TOP mining, Jiang Zhuoer, has forecasted that the ongoing crypto bear market could end at the end of 2022 and coincide with Ethereum's Merge. According to his analysis, this bull market ended on November 10, 2021(the end of the 4-year cycle), repeating history again. If the 4-year Bitcoin cycle is to be used as a reference, the ongoing crypto bear market will end in 2022 and coincide with ETH's Merge.
Although various studies, statistics, and experience of professional investors and finance geeks suggest and warn that this might be the worst downfall, especially for the crypto market, the high magnitude of losses over the last few months, premium cryptocurrencies hitting rock bottom, the rest of us can only hope for the reds to turn into greens, and if not that at least recover at whatever pace as soon as possible.
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