On-chain analysis finds that a bear market floor may be in sight, but the average duration of previous cycles suggests that could be several months away.
In the latest report examining the state of the Bitcoin network, analysts at Glassnode observed that several macro metrics indicate a bear market floor has been established given the market’s similarities to previous bear cycles.
Only 3% of Bitcoin supply held by short term holders is currently in profit, while over 31% of long term holders are at a loss. According to the analysts, this implies a likelihood that capitulation among investors has reached a peak.
Another metric that signals a bear market floor, according to Glassnode, is the Adjusted-Net Unrealized Profit/Loss (aNUPL). The aNUPL measures the difference between unrealized profit and loss of the networks as a proportion of market cap, corrected for any contribution from inactive supply.
Analysts found that the aNUPL has been trading below zero for the last 119 days which is equivalent to the duration that it stayed below zero in previous bear market bottom phases.
“Also, the lowest value recorded for aNUPL (-39%) in the current bear market has dropped below the -25% threshold level, which indicates the severity of the ongoing undervalued market structure,” stated Glassnode.
In terms of how Bitcoin fared compared to other assets in the current global macro environment, however, analysts found that the digital asset had actually gained ground on many traditional assets.
“In stark contrast to highly volatile equity, credit, and forex markets, Bitcoin has remained remarkably stable in recent weeks,” they said.