2022 Most Significant Bear Market yet, Says Glassnode

The bear market of 2022 has proven to be the most significant yet for cryptocurrencies, according to a recent report from Glassnode.

While equities and bonds have also been struggling so far this year, 2022 has been historically challenging year-to-date for digital assets, according to a report from the blockchain analysis firm. “It can reasonably be argued that 2022 is the most significant bear market in digital asset history,” the report begins. From a peak of over $3 trillion in November last year, cryptocurrency markets have liquidated by the trillions and is currently struggling just below $1 trillion in total market capitalization.

The report said that ever-tightening economic conditions, such as surging inflation, and rising interest rates, have put extreme pressure on the “over-leveraged crypto ecosystem.” Highly-leveraged funds have also become increasingly appealing targets for liquidators who are looking to cash them out. The report also highlights “the rehypothecation of collateral coming due, both in on-chain, and off-chain venues”

The most significant indicator of this bear market setting itself apart from others is that both Bitcoin and Ethereum have now also traded below their previous cycle ATHs for the first time. This has subsequently plunged a significant proportion of the market into unrealized loss, with all 2021-22 investors, for instance, now being underwater. 

The report details Bitcoin’s current dip below the 200-day moving average (MA). According to Glassnode analysis, the negative deviation from realized price and net realized losses have made 2022 the worst in Bitcoin’s history. 

This was also determined with another metric using the 200d MA, the Mayer Multiple (MM), which 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),” according to the results of the blockchain analysis firm’s report.

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