Bitcoin Bear Market Compared to Previous Cycle Bottoms

In its ‘week on chain’ report on October 31, analytics provider Glassnode made a series of comparisons between the current bottom of the Bitcoin market cycle and those of previous bear markets.

Last week’s relief rally appears to have spun out with a double-top rejection, as reported by The crypto potato yesterday. Glassnode stated that the market “hammered out a Bitcoin bottom, with almost textbook similarity to previous cycle lows.”

It reported that, as in previous cycles, the Bitcoin bear market has inflicted severe financial losses on investors and hodlers. The last thing that remains is a component of time and investor apathy, it added.

#Bitcoin has rallied back above the key psychological level of $20k after many months of low volatility.

In this edition, we analyze how Bitcoin can hammer out an almost textbook market floor and what risks may lie ahead.

Read it here 👇

— glassnode (@glassnode) 31 October 2022

Hammer out a bottom

Glassnode used a variety of metrics, such as Realized Price and Mayer Multiples, to determine cycle lows and a bottom discovery phase.

The realized price, or average acquisition price per coin for the broader market, is currently at $21,105, according to Woo Charts. When spot prices trade below the realized price, “the overall market can be considered to be in an unrealized loss,” Glassnode noted. That’s how it’s been for the better part of the last four months.

The Mayer Multiple, which is the ratio of the price to the 200-day simple moving average (SMA), helps identify oversold or overbought conditions. Values ​​below 0.6, where they are now, indicate cyclically oversold markets.

These conditions played out in both the 2014-15 and 2018-19 bear markets, but not as long as the current duration. The upper and lower limits of this sideways channel tend to be around the realized price to the balanced price, with the market cap somewhere in between.

It noted that this state of “financial stress” continues into the Bitcoin bull market transition, so there could be much more to this bear cycle.

“This state of acute financial stress has been in play for 3.5 months so far, which is shorter than similar intervals in previous bear markets.”

Glassnode concluded that the markets had not yet seen an influx of new demand or a transition to bullish conditions, but “there appear to be seeds planted in the ground.”

A small change in the monthly MACD indicator can also hint at a longer-term change.

And there you have it ladies and gentlemen, a momentum [and momentous] shift on the monthly MACD.

No guarantee of safety, but certainly a strong indication of #Bitcoin macro reversal … given the previous historical trend. pic.twitter.com/HiuPDT9xiU

— dave the wave🌊🐫 (@davthewave) 1 November 2022

Bitcoin Price Outlook

Bitcoin traded flat on the day at $20,510 at the time of writing, according to CoinGecko. It has gained just over 6% over the past seven days, but is heading for a double top formation, suggesting further losses.

Bitcoin is currently down 70% from its all-time high almost a year ago, and the bears are not out of the woods yet.