According to Bloomberg News, the crypto space is witnessing a heavy debate about whether Bitcoin is mired in the bear market. The ones supporting the highly volatile digital currency think that it is pretty likely that a rebound could be a possibility, especially after it had shed half of its value since November when Bitcoin was at an all-time high. However, a few metrics believe that crypto winter has arrived already, as per Glassnode, which is a market intelligence company.
Glassnode has pointed out a few indicators to support its Bitcoin metrics claims. The first metric is NUPL, or net unrealized profit/loss metric, which measures the overall profitability in the market. It suggests a nearly one-third market value of Bitcoin while standing at 0.325. It is seen as an unrealized profit, which usually occurs in the mid-phases of a bear market.
The second metric is called the MVRV ratio, and this is computed as the market cap, divided by the realized cap. Bloomberg News reveals that as per Glassnode, it serves as a helpful tool to identify periods of meager and high profitability of investors.
The third metric is the RTLR or realized-to-liveliness ratio, like a holder-fair value model. It shows that the market is below the $39,200 RTLR price but higher than $24,200, which is the realized price. This is a development that has been observed during the mid-phases of the bear market in the earlier stages.
According to Bloomberg News and Noelle Acheson, associated as head of market insights at Genesis Global Trading, it is not possible to use just one indicator independently in a bear market. Although NUPL is a measure of whether the market is going down, it is just too early to ascertain the same. Similarly, MVRV signals weakness in the market, but this alone cannot be used as an argument.
Memories are from last year’s crypto winter which is a term used for a sharp slump. A fresh fear is arising about the same slump. Last year, the price of Bitcoin plunged by 80% and more to as low as $3,100, and it was more than a year for the token to reach another high.
Of late, Bitcoin plunged to as low as $33,000 from $69,000 in less than three months amidst a selloff in risk assets with a growing conviction that the Federal Reserve will bounce back the policy settings that are ultra-accommodative.
This drop has hit every quarter of the crypto ecosystem, and this has happened to start from the Bitcoin to meme coins to crypto exchanges that are publicly listed.
Presently, Bitcoin selloff is modest downright compared to the 90% plunge in value compared to earlier in history, as per Bespoke Investment Group. A 90% peak-trough plunge in the coin price would make it drop to a further $7000.
