Summary:
- Bitcoin’s value has been declining for a record-breaking eight consecutive weeks.
- The ongoing pullback has put a notable dent in the entire crypto market performance.
- Fear in the Bitcoin and Ethereum derivatives markets indicates that downside selling pressure will continue for the next three to six months.
- However, bear markets eventually usher in bull markets down the road.
The crypto markets have somewhat come to terms with the depegging of UST, the downward spiral of LUNA that followed, and both events affecting the price of Bitcoin and the entire digital asset spectrum. According to a recent report by the team at Glassnode, the Bitcoin market has continued to trade lower for eight consecutive weeks, thus becoming ‘the longest continuous string of red weekly candles in history.’
Fear in the Bitcoin and Ethereum Derivative Markets Hint Suggests More Pain for the Next Three to Six Weeks
The report goes on to highlight that the fear currently in the Bitcoin and Ethereum derivative markets, could point towards a scenario where the outlook is further downside at least for the next three to six months. The report explains:
Looking on-chain, we can see that both Ethereum and Bitcoin blockspace demand has fallen to multi-year lows, and the rate of burning of ETH via EIP1559 is now at an all-time-low.
Coupling poor price performance, fearful derivatives pricing, and exceedingly lacklustre demand for block-space on both Bitcoin and Ethereum, we can deduce that the demand side is likely to continue seeing headwinds.
Bitcoin and Ethereum’s Correlation Remains Strong
Furthermore, according to the team at Glassnode, Bitcoin has had an average return of -30% in the last month, implying that BTC lost 1% of its value every day in the last 30 days. In the case of Ethereum, the number two digital asset has been hit harder by the ongoing drawdown, experiencing a -34.9% return in the same period.
Consequently, the ‘correlation of performance between these two assets remains strong, despite numerous differences in their fundamental properties.’
Bear Markets Have a Way of Ending and Author the Bull that Follows
In its concluding remarks, the report by Glassnode pointed out that the current bear market has taken its toll on crypto traders and investors. Additionally, the team at Glassnode cautioned that bear markets often get worse before they get better. But there is some hope at the end of the tunnel as ‘bear markets do have a way of ending’ and ‘bear markets author the bull that follows’.