From the highs of R1.121 million to the lows of R280K, Bitcoin has seen it all. The first half of 2022 has been a stark reflection of the crypto-volatility economy’s trends. During this time, both internal and external variables conspired to produce one of Bitcoin’s poorest half-year performances.
This pattern was also visible in Glassnode’s and CoinMarketCap’s new reports.
Despite its flaws, the current bear market is the least severe in Bitcoin’s history in terms of decline. However, the scale and magnitude of the impact have been unprecedented.
Other Bitcoin bear markets have fared worse in percentage terms in the past. In 2011, the figure was 93%; in 2015, 2018, and March 2020, it was 84%; and in March 2021, it was 75%. All previous Bitcoin bearish saw prices fall below the Realized Price for an average of 180 days (excluding March 2020 which lasted just seven days). When spot prices fall below the realized price, the MVRV Ratio falls below one.
This is frequently an indication that the average Bitcoin investor is keeping coins at a price lower than the on-chain cost basis. As a result, they are holding an unrealized loss.
In the past, Bitcoin bear markets have seen BTC values fall below the Realized Price for approximately six months (except for the March 2020 bear cycle). At the same time, the MVRV has been below 1 for the majority of 2022. This indicates that the majority of Bitcoin holders are carrying unrealized losses. Bitcoin has experienced four “big “capitulation” days. The market saw two deleveraging events in December 2021 and January 2022. These days, net losses totalled R36 billion and R41 billion, respectively.
Then there were two severe blackouts during the second quarter. During this time, the LUNA collapse served as a trigger for the events that followed.
Over a three-day span, Bitcoin investors suffered net losses in excess of -R102 billion. Then, in June, as the price fell to R290k, a new record of on-day realized losses of R70 billion was achieved. So, where will Bitcoin go from here? At the time of publication, it was trading slightly above R391K, following a surge after the Fed boosted interest rates. Recently, there has been some revival in the general market. The market has regained its focus, and trader optimism is high.
Only time will tell if it’s a keeper.