Bitcoin (BTC) bear markets come in many shapes and sizes, but this market has given many reasons to panic.
BTC was described as facing a “bear of historic proportions” in 2022, but just a year ago, a similar sense of doom swept the crypto markets as Bitcoin saw a 50% drop in weeks.
Away from the price, the 2022 data on the series looks very different. Cointelegraph takes a look at three key metrics that show how the Bitcoin bear market is unlike the last.
Everyone remembers the exit of the bitcoin miner from China, which effectively banned the practice in one of its most prolific regions.
While the extent of the ban has since been questioned, the move at the time saw large numbers of network participants – mostly to the US – move within weeks.
As a result, the hash rate of the Bitcoin network – the computing power dedicated to mining – has almost halved. At the time, this was unprecedented, while miners felt they had no choice but to at least temporarily halt operations.
This time, it’s not routine but just arithmetic threatening miners. The decline in the price of Bitcoin to its lowest levels in 19 months has put more pressure on the profitability of mining operations.
As Cointelegraph reports, however, a mass capitulation event may not necessarily occur, even at current levels, amid suggestions that miners who need to sell bitcoin stock have already done so.
The hash rate supports this thesis, having fallen a maximum of about 20% from all-time highs before rebounding, according to estimates from data source MiningPoolStats.
Bitcoin estimated hash rate chart (screenshot). Source: MiningPoolStats
The decline in July 2021 was accompanied by a slowdown in the activity of the Bitcoin network.
Active titles, as measured by on-chain analytics platform CryptoQuant, saw a significant decline during June of last year before rebounding in line with price in the third quarter.
This time around, no such drop has occurred, which indicates that the market is more busy moving their bitcoins. This has a number of implications – traders may become sellers due to lower prices; Traders may seek to profit from volatility; Others may be looking to “buy the dip”.
However, it should be noted that the overall volume on the chain remains low, which means that the buy side support may not be enough to end the downtrend in the price, analysts say.