Why the ongoing bear market may be far better than you realize…
Cryptocurrencies have suffered from a brutal sell-off the past few months considering the Terra fiasco. But the last fortnight has been especially bad for investors as they lost a significant chunk of their savings. However, a bearish run is a part and parcel of this niche yet emerging asset class.
Thus given instances of the past, how severe is the ongoing bear market?
The ongoing correction period saw the crypto market drop by more than 60%, from a high of $3.07 trillion to $1.23 trillion at press time. The prices of Bitcoin [BTC] and Ethereum [ETH] are down by approximately 60% from their highs and many smaller assets have also dropped over 80%. On-chain activity for most assets has witnessed the same fate, leaving many investors in a state of concern.
Source: ITB
That said, certain on-chain indicators suggest the crypto market’s current downtrend may not end up being as brutal as past bear markets. Lucas Outumuro, head of research at analytics firm IntoTheBlock, asserted this viewpoint in a blog post on 4 June. He also stated that looking at key indicators from a long-term perspective, this time may be different from other bear markets.
The crypto market has experienced severe downfalls since its inception where it had even deeper bear markets and emerged stronger a few years later.
“Crashes of 80%+ are a staple in crypto bear markets, but there are arguments to be made for less sharp losses in the future,” the blog added.
Consider a few fundamental indicators. Transaction fees for instance, here (2021-2022) it dropped less than in previous bear markets (2017-2018).
Source: ITB
The blog stated:
“As a high portion of demand comes from speculation, it is normal for transaction fees to plummet severely as trading sentiment
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