The crypto economy has slipped below the $1 trillion mark to around $970 billion as a large number of digital currencies have lost more than half their USD value since November 2021. Bitcoin is down 70% from its all-time high last year, and a new report from Glassnode Insights calls the current bear market “a bear of historic proportions,” while highlighting that “it can reasonably be argued that 2022 is the most significant bear market in digital asset history.”
200-Day Moving Average Signals Deep Bear Territory
Glassnode's analysis uses the 200-day moving average (200DMA) and the Mayer Multiple to characterize bear markets. “When prices trade below the 200DMA, it is often considered a bear market,” the report notes. With Bitcoin firmly below this level for weeks, the deviation is among the largest on record, indicating a prolonged and severe downturn.
Record Capital Outflow: -2.73 Standard Deviations
The report focuses on the 30-day change Z-Score of the realized cap, which measures monthly capital inflow/outflow on a statistical basis. “By this measure, Bitcoin is currently experiencing the largest capital outflow event in history, hitting -2.73 standard deviations (SD) from the mean,” Glassnode explains. “This is one whole SD larger than the next largest events, occurring at the end of the 2018 Bear Market, and again in the March 2020 sell-off.” This suggests investors are fleeing at an unprecedented pace.
Historical Pattern: 80% Drop Suggests $13,800 Potential Floor
Historically, Bitcoin has dropped 80%+ in all major bear markets. From the $69,000 peak, an 80% decline would place BTC around $13,800. While some believe the bottom is near, others warn that max pain has not arrived. Glassnode's data shows that even on a relative basis, the $4+ billion net loss is staggering.
Ethereum Underperforms, Longer Time Below Realized Price
For Ethereum, Glassnode notes that ETH prices have spent 37.5% of their trading life below the realized price, compared to Bitcoin's 13.9%. This reflects investors pulling capital higher up the risk curve during bear markets, leading to longer periods of ETH trading below investor cost bases.
MVRV Ratio Hits Historic Lows
The current cycle low of the MVRV ratio is 0.60, with only 277 days in history recording a lower value—just 11% of trading history. This indicates deep undervaluation and widespread losses. Glassnode concludes: “The various studies described above highlight the sheer magnitude of investor losses, the scale of capital destruction, and the observable capitulation events occurring over the last few months. Given the extensive duration and size of the prevailing bear market, 2022 can be reasonably argued to be the most significant bear market in the history of digital assets.”