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The crypto market continues to be in a state of turmoil with the market shedding from it's all-time high gains by over 72%. While adverse macroeconomic conditions and the US Fed’s hike of interest rate in a bid to control inflation dampened the market enthusiasm, multiple catastrophes in the form of the Terra-UST crash followed by 3AC and Celsius near-insolvency plight have added fuel to the fire.
The current market cap stands at $854 billion, down from $2.2 trillion at the beginning of 2022. Bitcoin (BTC) and Etherum (ETH) are barely managing to stay afloat their critical support levels and currently stand at $19,740 and $1,076 respectively.
If we look at the 2018 bear market, the market cap plunged by more than 86% to reach $3,200, after touching a high of $19,000 in 2017. Let’s make a head-on comparison with the 2018 bear market to find if we are undergoing a similar market condition or are conditions different this time?
The 2018 market crash followed the initial coin offering (ICO) hype that had multiple scam projects duping investors of their money. At that time, the number of active wallets dropped from 1.2 million to as low as 402,000. However, in 2022 the crypto addresses remain stable at around 1 million despite the decline. Traders, both retail and institutional, continue to show confidence and long-term optimism in the market.
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<source: tradingview.com, Crytpocap>
Talking about Bitcoin (BTC) - BTC plunged by nearly 81% in 2018, while the 2022 bear market has seen Bitcoin dip by 75%. The whole of 2022 has seen BTC below its 200-day moving average similar to 2018. And for a long time, BTC has failed to break above its 200-week moving average (WMA) which stands around $21k. The 200-WMA is an indicator of the average value of past prices and will be broken at some point as it did the last three times when BTC slipped below it and has to hold above it. Investors are in consensus that 200-WMA is a critical resistance but it might take some more months before BTC moves above it.
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<source: tradingview.com, Binance>
BTC is expected to plunge by another 10-15% if it is to reach 2018 lows in percentage. However, it is predicted that the whole of 2022 will be bearish before the market takes an upswing. If BTC’s realized value is somewhere around $23,000, BTC is trading below it and the crypto market may soon find the bear market bottom as the asset price dips below this level only when the bottom is near. However, nothing could be said with certainty amidst the controversies and contagion of failures the market is witnessing right now.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.