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According to Glassnode, several factors have made the current crypto bear market the worst ever recorded since most Bitcoin (BTC) traders are underwater and continue to sell at a loss.
Blockchain analysis firm Glassnode's Saturday study titled "A Bear of Historic Proportions" describes how Bitcoin's current drop below the 200-day moving average (MA), negative divergence from realized price, and net realized losses would make 2022 the worst year in Bitcoin's history:
"In the midst of this, Bitcoin and Ethereum have both traded below their previous cycle ATHs which is a first in history."
The first and most evident sign of a bear market is when the spot price of Bitcoin (BTC) goes below the 200-day moving average and, in the most extreme case, the 200-week moving average. To illustrate how uncommon the present price levels are, Glassnode demonstrated that Bitcoin fell below 50% of its 200-day moving average during the lousy market of 2022.
Glassnode also proved that the Mayer Multiple (MM) going below 0.5 is a highly unusual occurrence that has not occurred since 2015. The MM incorporates price moves above and below the 200-day moving average to indicate overbought and oversold circumstances. According to the research, just 84 out of 4160 trading days (2 percent) had recorded a closing MM value below 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).”
Indicative of the severity of present market circumstances, the spot price has fallen below the realized price, forcing dealers to sell coins at a loss. This cascading effect is “typical of bad markets and market capitulations,” according to Glassnode.
This is just the third occasion in the previous six years and the fifth time since Bitcoin’s debut in 2009 that spot prices have traded below the realized price, according to Glassnode.
“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.”
The rarity of this event is demonstrated by the fact that just 13.9% of all Bitcoin trading days have seen spot prices fall below realized prices.
Investors that lock in losses on the largest cryptocurrency by market capitalization compound the situation. In June 2022, when Bitcoin plummeted below $20,000, Glassnode said that BTC investors suffered “the greatest day USD denominated realized loss in history:”
“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.”
Considering these unfavorable measures, Glassnode concludes that the market is now experiencing a capitulation event. Cointelegraph confirmed this view on Friday by noting that miners have begun selling their holdings, which is another sign of surrender. Such occurrences frequently mark the lowest price range in a cycle.
According to CoinGecko, Bitcoin’s price is at $21,207, which is 70 percent lower than its peak in November 2021.