Why This Bitcoin Bear Market Is Less Violent Than You Think

The cryptocurrency sector has taken quite a beating lately. In addition to the sharply falling prices, we also saw a very large player disappear from the market in just a few days. This does not bode well for investors’ portfolios. However, these sharp declines are part of the sector. But how bad is this one bear market actually compared to previous years?

Rapidly declining crypto market

During this period, we saw the crypto market drop more than 60% from its peak. The value of the market has fallen from $3.07 trillion to $1.2 trillion. The price of bitcoin (BTC) and ethereum (ETH) have also fallen by about 60% and some altcoins even more. So we see that some on chain data also show bad messages.

But we also see that other on-chain data indicates that the current downward market is not as bad as last time. Lucas Outumuro, head of research at analytics firm IntoTheBlock, shared his view of the market in a blog post on June 4. described† In this he saw that this market could be different from other times.

BTC HODLers are very important

Both HODLers of BTC and ETH have an important role in the market. For example, we saw that long-term investors actually used a declining market to increase their position.

In addition, through on-chain data, we see that development activity on blockchains such as Bitcoin and Ethereum continued to grow. More and more developers are tinkering with the Bitcoin or Ethereum network. Activity has increased by 50% in just two years.

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Source: IntoTheBlock

Finally, we also see that the average transaction costs paid on the Bitcoin network have fallen less sharply than in previous down markets. This means that the network is still being used more than before. For example, we see that Bitcoin was good for about $500,000 in transaction costs in May 2022, compared to just $130,000 in May 2018.

So we see that this bear market was much less intense than the bear market from 2018.

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