BITCOIN HAS SEEN HARD DAYS BUT IT WOULD GET DIFFERENT THIS TIME
Glassnode analysts track the value of the gauges - from cases where Bitcoin falls below the moving average to closing below the so-called balance point, which reflects the market value similar to the value paid for coins minus the final amount reached. What they are seeing now is that many of these steps are all illuminated in the same way, something that rarely happens.
Over the past five years, analysts say, there have been only six similar categories, some of which have targeted bear markets, such as November 2018 and March 2020. But can this time prove otherwise?
"The low-cost Bitcoin construction case is based on the apparent dominance of strong investors, the historically significant decline in many oscillators, and the strong combination of inflation rising to an astonishing range of price models in the bear market," writes analysts at Glassnode. "However, can these HODLers hold the line?"
Bitcoin on Thursday closed one of its worst sites in history, giving it 60% in April-June. The coin by Friday lost 70% of its value from the peak in November. In this context, Bitcoin trading activity has declined "significantly," according to Arcane Research. Meanwhile, assets under crypto investment product assets in June reached a record low, with ETFs experiencing the largest decline - that segment saw a decline of more than 50% to $ 1.3 billion, according to CryptoCompare.
Ordinary criminals were to be blamed: the Federal Reserve is determined to raise interest rates to reduce inflation, even if it harms the economy; selloff on all categories of assets and sadness; and a growing list of crypto firms, lenders and hedge funds cracked downwards. Dan Morehead of Pantera Capital said recently there could be more "major downturns" in the coming months.
Ross Mayfield, an investment strategy analyst at Baird, says much of the pain so far has already been put on the price of crypto - or at least Bitcoin. However, "that does not mean that it will not go down much in the near future because the Fed will continue to raise interest rates, and if we go into recession, there will be very little interest in the most dangerous and speculative assets," he said. he said by telephone. "It's really a challenge going forward," Mayfield added.
On-chain activity tends to peak during bull markets and escalates further during market crashes as participants try to lower their positions, according to Arcane Research. When its value stabilizes at a lower level, such activity also tends to decline. "It looks like we're in a situation like this now," wrote Jaran Mellerud of the company. "The Bitcoin blockchain has entered a sleep mode as the crypto winter is proving its existence."
One positive sign: Brett Munster in Blockforce Capital points out that often during bear markets, coins are issued in the cold and returned to the exchange, which may indicate the intention to sell. For now, it is not.
"With the exception of ~ 80,000 coins lost on the market by the Luna foundation in a failed attempt to protect the UST anchor, we have continued to see the continuous flow of Bitcoin without trading and set aside long-term accumulation," Munster wrote. Moreover, the number of wallets with a non-zero value Bitcoin in them has grown, among other developments.
"Unlike in 2018, when the demand for Bitcoin fell during that price crash, there are no signs of a decline in adoption rates today," he said. "Despite the recent fall in price, the foundations of Bitcoin are stronger now than at any time in its history."