According to Glassnode, on-chain data finally verifies what crypto traders have suspected for some time. Bitcoin is in a sustained bear market.
According to blockchain analytics firm Glassnode, Bitcoin may go for a prolonged down market.
The firm’s recent market research identifies a number of “bearish factors”. This includes declining on-chain activity on the Bitcoin network and over 4.7 million BTC held at an unrealized loss.
According to the report, the decline in the crypto market and traditional equities is a reflection of broader market uncertainty. The uncertainty surrounding the Federal Reserve’s looming interest rate hikes, the conflict in Ukraine, and civil unrest in Canada. The latter has resulted in the freezing of bank accounts and Bitcoin funds of those involved in ongoing convoy protests in Ottawa.
In the meantime, the Federal Reserve has been threatening to raise interest rates for months. This is in a bid to battle the US economy’s record inflation. Higher interest rates harm investor trust in risk assets, such as Bitcoin.
Glassnode
Glassnode analysts now feel that Bitcoin’s long-term decline is more likely to continue. “The more likely it is that investors’ held coins, they would be spent and sold,” the study concludes. Also, “the longer they remain underwater on their position and the greater the unrealized loss.” Most network entities are currently in a bad state.
This week, the number of active Bitcoin addresses was at 275,000, down from nearly 350,000 in January of last year. Investors see weak network activity as a bear market signal. This is despite the fact that the number of dedicated holders is continuing to expand over time. Despite this, Glass node discovered that during the last 30 days, something emptied 219,000 addresses. This might be the start of a “period of net outflows of users from the network”. One that is similar to what happened in May of 2021.
What Comes Next?
Crypto bulls, according to Glassnode, “have their work cut out for them”. This is because of the numerous on-chain and off-chain bearish pressures they must contend with. There are signs of optimism in the supply-side dynamics, compared to previous downturn markets. Investors in the long term are more likely to stick onto their Bitcoins rather than liquidate their direct asset exposure, according to the firm.
There is a “bear market,” Glassnode argues, but “keep in mind that the bear spawns the bull which follows.”
Investors who bought at the peak of the market may be feeling negative right now, despite the optimistic outlook: From its all-time high of $69,000, the value of bitcoin has fallen by more than 45 percent.
