Are We In A Bear Market? Glassnode Analyses The Latest Bitcoin Crash

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Let’s reduce to the chase: Glassnode thinks we’re in a bear market. In tinheritor newest “The Week On-Chain” e-newsletter, the corporate tries to “establish the likelihood that a prolonged bear market is in play” by “using historical investor behaviour, and profitability patterns as our guide.” One factor’s for positive, the latest crash was extreme, and “such a heavy drawdown is likely to change investor perceptions and sentiment at a macro scale.”

Related Reading | Bitcoin Leads As Markets Sees Record Outflows. Bear Market Incoming?

How extreme was it? According to Glassnode, “this is now the second worst sell-off since the 2018-20 bear market, eclipsed only by July 2021, where the market fell -54% from the highs set in April.” Apart from the worth, traders “capitulated over $2.5 Billion in net realised value on-chain this week.” Who had been these paper hand traders? “The lion’s share of these losses are attributed to Short-Term Holders.” Of course.

Glassnode Points Out The Bear Market Indicators

  • The first indicator Glassnode goes for is “The Net Unrealised Profit/Loss (NUPL) metric.” Which measures “the overall market profitability as a proportion of market cap.” How is Bitcoin doing on that entrance? “NUPL is currently trading at 0.325 which indicates that an equivalent to 32.5% of the Bitcoin market cap is held as an unrealised profit.”

BTC Price Drawdown from ATH | Source: Glassnode

How does this level to a bear market? “Considering previous cycles, such low profitability is typical in the early to mid phase of a bear market (orange). One could also reasonably argue that a bear market started in May 2021 based on this observation.” This just isn’t sufficient, although. But Glassnode has extra.

  • The second indicator the corporate hit us with is “The MVRV Ratio.” This one “is calculated as the market cap, divided by the realised cap; and is a useful tool for identifying periods of high, and poor investor profitability.”

How does this level to a bear market? “With a current MVRV-Z reading of 0.85,  the market is well within territory visited in bearish markets, and a bearish divergence is noted, similar to the NUPL metric above.” Is this sufficient? No method. But Glassnode has an ace up its sleeve.

  • The third indicator is “the Realised-to-Liveliness Ratio (RTLR).” They use “the Realised Price using Liveliness in the denominator” to calculate this one. 

How does this level to a bear market? “The market is now trading below the RTLR price of $39.2k, but above the Realised price of $24.2k. Again, this is often observed during early to mid stage bear markets.”

Who Sold And Who Is Still Holding Strong?

There’s no shock right here. The “Short-Term Holders (STH)” are promoting. How does Glassnode outline STHs, although? By the age of their cash. “Coins are considered to be owned by STHs when they are younger than ~155-days, and are statistically more likely to be spent in the face of volatility.” No shock there both.

It’s value declaring that the STH’s cash are “currently held at a loss.” In truth, “as of this week, almost the entire STH supply is underwater.” That might be scary for newcomers, so these cash are vulnerable to being bought. At a loss. These individuals are going to remorse their emotional choices for all times, however that’s a subject for an additional article.

BTCUSD price chart for 01/24/2022 - TradingView

BTC worth chart for 01/24/2022 on Oanda | Source: BTC/USD on

The different query right here is, who’s holding robust? According to Glassnode, “Interestingly, STH supply remains near multi-year lows, which is indicative of their counter-part, the Long-Term Holders (LTHs), who appear impressively unfazed by such a severe drawdown.” Of course. People who already understood the sport aren’t straightforward to shake.

How are the LTH’s cash doing? “Over 59.3% of the circulating supply has now been dormant for over 1yr, increasing by 5.8% of circulating supply in the last three months.” This sounds bullish, however Glassnode finds a method to rain on the LTH’s parade. “Whilst a rising, and large proportion of mature coins is generally considered constructive, it once again bears similarities to a bear market, a time when only the HODLers and patient accumulators remain.”

Related Reading | Bitcoin Bottom Signal From Bear Market, Black Thursday Could Save The Bull Run

Conclusions And Hopium

According to Glassnode, one may argue that the “bear market started in May 2021.” Does it really feel like a bear market, although? No, it doesn’t. It doesn’t really feel like a bull market, both. We could also be in a brand new section. The Bitcoin cycle is likely to be useless. Or possibly we’re simply in a bear market as Glassnode tried to show. Either method, LTHs aren’t promoting.

Featured Image by mana5280 on Unsplash | Charts by Glassnode and TradingView

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