Current Bear Market is Worst Ever Recorded

If you haven't heard, the crypto market crashed in May, wiping out more than $2 trillion in value. Terra went from having a worth of more than $50 billion to tumbling into decay in the span of one week.

Other cryptocurrencies also fell apart as Terra did, wiping off approximately $40 billion in investor wealth. A decline in the value of all cryptocurrencies was sparked when the algorithmic stablecoin UST lost its peg to the US dollar and the price of LUNA fell by 98%. The end outcome was the first time since January 2021 that the market capitalization dropped below $1 trillion.

Due to their volatility, cryptocurrencies have a history of boom and bust cycles, but according to a recent assessment by blockchain analytical company Glassnode, the present bear market is the worst ever seen.

More precisely, on-chain research shows that 2022 is unquestionably the worst year in Bitcoin (BTC) history due to the present decline below the 200-day moving average (MA), negative divergence from realized price, and net realized losses.

The Intensity of the Present Market Situation

When the spot price of Bitcoin goes below the 200-day MA, or worse, the 200-week MA, it is the most clear sign of a bear market.

Given that prices haven't fallen below the 0.5 Mayer Multiple (MM) since 2015, Glassnode emphasized how unusual the present pricing levels are.

Only 84 out of 4160 trading days (2%) had a closing MM value below 0.5, according to the research. Price fluctuations above and below the 200-day MA are taken into account by the MM to determine if an asset is overbought or oversold.

Ethereum's (ETH) Mayer Multiple has reached 0.37, which is below the 0.6 MM band downward deviation. The price of ETH is now trading at a discount of 63% to its 200-day MA.

An Act of Capitulation

Traders may progressively sell their coins at a loss when the spot price falls below the realized price. A noteworthy statement made by Glassnode was that a cascading effect like this is characteristic of bad markets and market capitulations.

Although this is the third occasion in the last six years and the fifth time since 2009, occurrences where spot prices trade below the realized price are uncommon.

Only 13.9 percent of all Bitcoin trading days have seen spot prices go below unrealized prices, to put things in context.

Investors are locking in their losses on Bitcoin, which is making the situation worse. For instance, investors suffered a loss of -$4.234 billion on June 18 when Bitcoin went below the $20,000 threshold, which is a 22.5 percent rise from the previous record of $3.457 billion established in 2021.

All things considered, this indicates that the market is, regrettably, experiencing a capitulation scenario. Miners have begun selling their stacks as well, which is another sign that capitulation has occurred. Investors are also selling their Bitcoin holdings at a discount owing to the financial constraints of low liquidity and increasing inflation.

BTC is presently selling at about $20,000, down 69 percent from its all-time high of $69,044 reached in November 2021.