Glassnode: "Bitcoin enters deep bear market... similar to the Terra crisis period"

An analysis has found that the Bitcoin (BTC) market has already entered a deep bear market. A downturn signal that began in late October last year has materialized, with prices plunging about 45% from the peak, and the market structure is said to resemble May 2022, when the 'Terra-Luna crisis' unfolded.

On the 6th (local time), crypto data analytics firm Glassnode said on X, "An analysis of on-chain investor behavior patterns indicates that signals of a shift into a bear market had already been detected since October last year." In fact, Bitcoin’s price then slid from around $110,000 to the $60,000 level over roughly 100 days, posting a 45% drop.

The downturn appears to have been led by long-term holders. According to Glassnode’s "Long-Term Holder Profit Taking" data, they sold about 318,000 bitcoins since November 1.

Still, positive signals are also being detected. The report said, "Since early December, long-term holders’ holdings have turned back to an uptrend," adding that "this suggests their selling pressure has eased to some extent."

The market is currently assessed to be in the process of the bubble deflating. Based on the $60,000 level, the "degree of market losses" ratio was tallied at about 24%. This far exceeds the typical threshold for bull-bear transitions, indicating the market has entered a full-fledged downturn.

Glassnode said, "A 24% loss ratio points to a deep bear market, but it has not reached the 'capitulation' phase in which market participants lock in extreme losses of more than 50%," adding, "it is currently a process of removing the bubble from an overheated market."

It continued, "Investors who bought at the peak are enduring severe unrealized losses," and warned that "the current market structure is very similar to May 2022, when investor sentiment was extremely depressed."