February 25, 2024

Glassnode believes we’re in a bear market to get down to the point. The organization aims to establish the potential that a continuous bear market is in play in its current. The Week On-Chain newsletter utilizes previous investor behavior and profitability tendencies as our guidance. According to the report, the current drop was significant, and such a large drawdown is likely to impact investor perceptions and mood on a macro scale.

What was the severity of the situation? This is currently the 2nd worst sell-off during the 2018-20 bear market, as per Glassnode, bested only by July 2021, when the market plunged -54 percent from its April highs. Investors capitulated nearly $2.5B in net appreciated worth on-chain this week, in addition to the price. Who were the investors in the paper hand? Short-Term Holders are responsible for the majority of these losses. Yes, of course.

The Bear Market Indicators highlighted by Glassnode

The Net Unrealised Profit/Loss (NUPL) statistic is the first indicator Glassnode looks at. This metric measures “total market profitability as a percentage of market capitalization. What is the state of BTC in this regard? At the moment, NUPL trades at 0.325, implying that 32.5 percent of the BTC market capital is retained as unrealized profit.

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What does this mean in terms of a bear market? Such poor profitability is expected in the early-mid-period of a bear market. According to this finding, one might also fairly say that a bear market began in May 2021. However, this is insufficient. Glassnode, on the other hand, has more.

The MVRV Ratio, measured as the market capital divided by the achieved capital; and is a valuable metric for detecting times of extreme and bad investor profitability, is the firm’s 2nd indicator.

What does that mean in terms of a bear market? With a current MVRV-Z rating of 0.85, the market is firmly within the bearish market zone, indicating a bearish divergence, comparable to the NUPL indicator above. Is this sufficient? There’s no way. Glassnode, on the other hand, has the upper hand.

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The Realised-to-Liveliness Ratio (RTLR) is the third indicator. This one is calculated with the Realised Price with Liveliness in the Denominator.

What does this mean in terms of a bear market? The market is currently trading lower than the RTLR value of $39,200, but higher than the Realised price of $24,200. This is something that happens a lot in early to mid-stage bear markets.

Who has sold and who hasn’t?

Nothing is surprising about this. The Short-Term Holders (STH) are offloading their holdings. But how does Glassnode define STHs? According to the age of their coinage. When coins are younger than 155 days, they are regarded to be owned by STHs and are proportionally more possible based in the light of volatility. There’s also no mystery there.

The STH’s coins are presently controlled at a loss; it’s worth noting. Almost the whole STH stock is submerged this week. Because this may be frightening to newbies, those coins may be sold. I’m at a complete loss. These people will regret their emotional decisions for the rest of their lives, but that’s a subject for another essay.

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The other question is, who is standing firm in this situation? Surprisingly, STH supply is still close to multi-year lows, which is suggestive of their counterpart, the Long-Term Holders (LTHs), who seems astonishingly unmoved by such a steep reduction. People who have already figured out the game are difficult to persuade.

What’s the status of the LTH’s coins? Over 59.3 percent of the distribution supply has currently been inactive for over a year, with circulating supply growing by 5.8 percent within the past 3 months. This appears to be bullish, but Glassnode manages to derail the LTH’s plans. While a growing proportion of mature coins is widely regarded as positive, it is beginning to resemble a bear market whenever only the HODLers and diligent accumulators remain.


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