Bitcoin has lost over 70% of its value from the all-time high of around $68,000 in just six months and has recently consolidated in the $20,000 region. Still, a comparison with the previous bear market indicates a further dip. So while there are some bottom signals, the current market structure hasn’t priced in everything.
During the 2018-19 bear market, Bitcoin formed a breakpoint base around the $6k range before falling 50% over the course of a month. The drawdown was around 85% from ATH.
This time the breakpoint base was broken at around $29K before falling to $17.6k in just over two weeks. Overall, the drawdown extends to 75%, indicating a bottom might not be far away.
Furthermore, in the last bear phase, Glassnode observed traits of retribution of wealth – transfer of BTC from weak to strong hands – because of capitulation from retail investors and miners.
“For a bear market to reach an ultimate floor, the share of coins held at a loss should transfer primarily to those who are the least sensitive to price, and with the highest conviction”
stated the report.
Last time, at the bottom, long-term holders (LTH) held about 34% of the BTC supply in unrealized loss, while short-term holders (STH) accounted for 3-4%. Currently, LTHs hold about 28%, while STHs still have a high 16% in unrealized loss.
STHs are still speculating on prices, even though they have less conviction on the asset’s long-term value.
Glassnode believes Bitcoin requires further “downside risk to fully test investor resolve, and enable the market to establish a resilient bottom.”
You can read the complete report here.