Bitcoin (BTC), bear markets can come in many sizes and shapes, but this one has given many reasons to panic.
BTC is facing “a bear with historic proportions” in 2022. However, just one year ago, crypto markets were feeling the same fear as Bitcoin, which saw a 50% drop in just weeks.
However, 2022’s on-chain data is quite different from the price. Cointelegraph examines three metrics that show how this Bitcoin bear markets is different from the previous.
Everybody remembers the exodus of Bitcoin miners from China that effectively banned the practice in one its most lucrative areas.
Although the exact extent of the ban is still unknown, it was a move that saw large numbers of network participants migrate to the United States in just a few weeks.
Bitcoin’s network haveh rate, which is the computing power used for mining, was roughly halved. This was an unprecedented event, and miners felt they could not continue operations, even temporarily.
It isn’t red tape, but simple math that threatens miners this time. Mining operations are under increasing pressure due to the 19-month-low BTC price.
Cointelegraph reported that a mass capitulation may not occur at the current levels. However, there are suggestions that miners who need to sell BTC inventory might have already done this.
According to data resource MiningPolStats, the hash rate supported that thesis. It fell by an average of 20% from its all-time highs, before rebounding.
Bitcoin estimated hash rate chart (screenshot). Source: MiningPoolStats
The drawdown of July 2021 was accompanied with a slowdown on Bitcoin network activity.
On-chain analytics platform CryptoQuant measured active addresses. The drop was noticeable through June 2013 before prices rebounded in Q3.
This is a sign that the market is more busy in moving their BTC. This could have a variety of implications. Hodlers might be selling due to low prices. Traders may want to profit from volatility. Others may want to “buy” the dip.
Analysts argue that it is important to note that the overall on-chain volume is still low. This means that buy-side support will likely not be sufficient to stop the downward trend in price.
Chart of active Bitcoin addresses. Source: CryptoQuant
Finally, and despite the lower volumes, Bitcoin exchanges are losing coins at around $20,000 per day.
These are the same metrics that suggest the Bitcoin price crash may not be over
Normaly, panicked traders will sell or short on exchanges when prices fall. It seems that this time is different, because exchange users are not loading up, but removing coins.
CryptoQuant tracks 21 major exchanges and has a balance of 2.419 Million BTC. This is down from 2.544 Million at the beginning of Q2.
Last year, exchange reserves rose in the Q2 downtrend. They only recovered from their drop when BTC/USD recovered.
Bitcoin exchange reserves chart. Source: CryptoQuantcom. You should do your research before making any investment or trading decision.