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The majority of Bitcoin (BTC) traders are underwater — Glassnode

The current Bitcoin bear cycle is shaping up to be the worst one in history.

In its report from Saturday, “A Bear of Historic Proportions,” blockchain analysis company Glassnode explains how Bitcoin’s recent decline below the 200-day moving average (MA), negative deviation from realized price, and net realized losses have combined to make 2022 the worst year in the cryptocurrency’s history:

This is the first time in history that Bitcoin and Ethereum have both traded below their previous cycle ATHs.

When the spot price of Bitcoin (BTC) drops below the 200-day MA and, in a more extreme case, the 200-week MA; it is the first and most clear sign of a bear market. Glassnode demonstrated that during the 2022 bad market, Bitcoin has fallen below half the 200-day MA level; demonstrating how uncommon the current price levels are.

Additionally, Glassnode showed that the Mayer Multiple (MM) hasn’t fallen below 0.5 since 2015, which is an extremely rare occurrence. To display overbought or oversold conditions, the MM takes into account price moves above and below the 200-day MA. Only 84 out of 4160 trading days (2%) had a closing MM value below 0.5, according to the research.

“The 2021-22 cycle has recorded a lower MM value (0.487) than the low of the preceding cycle (0.511), for the first time in history.”

The spot price has fallen below the realized price. It forces dealers to sell their coins at a loss more frequently, confirms the severity of the current market conditions. Such a cascade effect, according to Glassnode, is “typical of bad markets and market capitulations.”

Glassnode noted that occasions where spot prices trade below the realized price are rare. It says that this is just the third instance in the previous six years. And the fifth instance since the beginning of Bitcoin in 2009:

The average market participant is currently in the red on their position because spot prices are currently trading at an 11.3 percent discount to the realised price.

Only 13.9% of all Bitcoin trading days have seen spot prices fall below realised prices. It highlights how uncommon this occurrence is.

Investors locking in their losses on the biggest cryptocurrency by market size worsens these circumstances. According to Glassnode, BTC investors suffered “the greatest daily USD denominated realised loss in history” when Bitcoin went below the $20,000 threshold in June 2022.

Glassnode determines that the market is experiencing a capitulation event after taking into account all the negative measures. 

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