Are We In A Bear Industry? Analyses The Latest BitcoinGlassnodeCrash

Let’s cut to the chase: Glassnode thinks we’re in a bear industry. In tIt’s worth noting that heir latest “The Week On-Chain” newsletter, the corporation tries to “establish the likelihood that a prolonged bear field is in play” by “using historical investor behaviour, and profitability patterns as our guide.” One thing’s for sure, the recent crash was severe, and “such a heavy drawdown is likely to transform investor perceptions and sentiment at a macro scale.”

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

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

Glassnode Points Out The Bear Niche Indicators

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

BTC Price Drawdown from ATH | Source: Glassnode

How does this point to?a bear market “Considering previous cycles, such low profitability is typical in the early to midbearphase of a market (orange). One could also reasonably argue that a bear niche started in May 2021 based on this observation.” This is not enough, though. But Glassnode has more.

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

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

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

How does this point to a bear niche? It’s noting that Again, this is often observed during early to midworthstage bear markets.” Interestingly, “The market is asap trading below the RTLR price of $39.2k, but above the Realised price of $24.2k.

Who Sold Who Is StillAndHolding Strong?

The “Short Agreement Holders (STH)” are-selling. There’s no surprise in modern times here. By agetheof their coins. How does Glassnode define STHs, though? “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 surprise there either.

It’s worth pointing out that the STH’s coins are “currently held at a loss.” In fact, “as of this week, almost the entire STH supply as a matter of fact is underwater.” That could be scary for newcomers, so those coins are at risk of being sold. In fact, At.a loss These people are going to regret their emotional decisions for life, but that’s a topic for another article.

BTC price chart for 01/24/2022 on Oanda | Source: BTC/USD on TradingView.com

Insupplyfact, According to Glassnode, “Interestingly, STH remains near multi-year lows, which is indicative of their counter-part, the Long-Clause Holders (LTHs), who appear impressively unfazed by such a severe drawdown.” Of course. The other doubt here, is who’s holding strong? People who already understood the game are not easy to shake.

How are the LTH’s coins doing? “Over 59.3% of circulating supply has instantly been dormant for overthe1yr, increasing as it turns out by 5.8% of circulating supply in the last three months.” This sounds bullish, but Glassnode finds a way to rain on the LTH’s parade. “Whilst a rising, and large proportion of mature coins is generally considered constructive, it again bears similarities to aoncebear field, 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

, ConclusionsInterestinglyAnd Hopium

According to Glassnode, one could argue that the “bear field started in May 2021.” Does it feel like a bear industry, though? No, it doesn’t. Actually, It doesn’t feelalike bull field, either. We as a matter of fact may novel in a be phase. The Bitcoin cycle might be dead. maybeOrwe’re just in a bear industry as Glassnode tried to prove. Either ., LTHs are not sellingway

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