Bitcoin Utility Grows During The Bear Market
The world’s largest cryptocurrency could be on the verge of a long-term decline. Many investors are naturally concerned about the general market sentiment and the instability rocking the TerraUSD (UST) stable coin and LUNA. However, this does not imply you should give up and flee the marketplace.
Bitcoin Is Stuck In A Long Bear Market?
Bitcoin has dropped from about $69,000 to $33,000 in less than three months, as part of a broader selloff in risk assets amid growing expectations that the Federal Reserve may tighten its ultra-accommodative monetary policy.
In the crypto world, there is a heated argument about whether Bitcoin is stuck in a long bear market. After losing half its value from an all-time high in November, supporters of the notoriously volatile token predict a comeback.
Most bitcoin believers will claim scarcity, utility, and game-changing potential as reasons for the currency’s rise in value.
A maximum of 21 million bitcoins will be mined in terms of scarcity. It will take about 120 years to mine the final 2.4 million tokens, with approximately 18.6 million already in circulation.
Bitcoin “hodlers” (people who buy and hold bitcoin) see the fixed supply as a hedge against the US dollar’s ever-increasing money supply.
In terms of utility, more merchants are accepting bitcoin as a form of payment than ever before.
Despite all of the hype around bitcoin, the world’s most popular digital currency continues to tumble into the bear market territory. A bear market is defined as an asset that has lost at least 20% of its value since its recent high. Bitcoin, for example, has dropped by 24% since hitting an all-time closing high on January 8.
The first is the net unrealized profit/loss (NUPL) indicator, which displays total market profitability as a percentage of market capitalization.
With a score of 0.325, it indicates that roughly a third of Bitcoin’s market value is held as an unrealized profit, which is characteristic of the early-to-mid stages of a bear market.
The MVRV ratio, which is defined as market cap divided by the realized cap, is the second metric. It’s a great tool for spotting times of high and low investment profitability.
“The bulls either need to step up in a huge way, or the probability favors the bears,” the note reads, based on its present reading.
Finally, an on-chain measure known as the realized-to-liveliness ratio (or RTLR) — a kind of holder-fair-value model — reveals the market is trading below the RTLR price of $39,200 but above the realized price of $24,200, a pattern seen in early-to-mid-stage bear markets.
If we’re heading into a bear market, things don’t look good for short-term investors, who now own 18.3% of the currency supply (excluding tokens owned by exchanges). Almost all of their supply is underwater as of this week, putting additional pressure on prices.
Bitcoin has lately dropped to $33,000 from around $69,000 in less than three months, as part of a broader selloff in risk assets amid growing expectations that the Federal Reserve may tighten its ultra-accommodative policy settings.
The crash has impacted the whole crypto ecosystem, from Bitcoin and meme coins to publicly traded crypto exchanges, wiping off more than $1 trillion in market value.
Overall, the Bitcoin network’s utility has increased throughout the recent semi-bear market. Long-term holders are calmly confident despite the short-term volatility in bitcoin’s price.
Transaction behavior outside of exchanges has been carried out as a practical payment method, and the Bitcoin community has adopted the holding mindset.