The current crypto bear market has been the worst ever recorded due to a combination of factors, including most Bitcoin traders who are still underwater and selling their coins at losses.
The report from Glassnode outlines how Bitcoin's current dip below the 200-day moving average (MA), negative deviation from realized price, and net losses have conspired to make 2022 one of Bitcoins' worst years in history.
"In the midst of this, Bitcoin and Ethereum have traded below their previous cycle ATHs, which is a first in history."
The first and most obvious indication that we're in a bear market is when the spot price of Bitcoin falls below both its 200-day MA as well as an even more extreme scenario: The 200-week moving average.
During the 2022 bear market, Bitcoin fell below half of its 200-day moving average. This is an infrequent event and could signify that we're approaching another significant bull run for cryptocurrencies.
The Glassnode team also demonstrated that falling below 0.5 the Mayer Multiple (MM) is an exceedingly rare occasion and hasn't happened since 2015. The MM factors in price changes above and below the 200-day MA to show if a token is overbought or oversold.
According to the report, it is a rare occasion when the MM value decreases below 0.5% of all trading days in any given year, with only 84 (2%) out 4160 recorded so far (2%).
"For the first time in history, the 2021-22 cycle has recorded a lower MM value (0.487) than the previous cycle's low (0.511)."
The falling prices of coins in the market have increasingly led traders to sell their assets at a loss. The spot price recently fell below the realized value, confirming that current market conditions are severe.
The Glassnode team said that such a cascade effect is "typical of bear markets and market capitulations."
Glassnode said it's uncommon for spot prices to trade below the realized price, noting that this is only the third time in six years and the fifth time since Bitcoin's launch in 2009.
"Spot prices are currently trading at an 11.3% discount to the realized price, signifying that the average market participant is now underwater on their position."
To show how rare this event is, the Glassnode model shows that only 13% of all Bitcoin trading days have seen spot prices dip below realized profits.
BTC is currently down 70% from its November 2021 high, trading at $21,321.01, according to CoinMarketCap.