By Marcus Sotiriou, analyst at the UK-based digital asset broker Global block
Bitcoin briefly fell below $20,000 this morning, while the total crypto market capitalization fell below $900 billion from a high of $3 trillion last year. A new report from Glassnode Insights claims that the current bear market is “a bear of historic proportions,” and points out that “it can reasonably be said that 2022 is the most important bear market in the history of digital assets”.
Glassnode data such as Market Value and Realized Value Oscillator (MVRV, which is a ratio of Market Value to Realized Value) can give us insight into how this bear market compares to bear markets previous ones. With the MVRV, we can see the relative monthly inflows/outflows of capital into Bitcoin. As this indicator reached -2.73 standard deviations (SD) from the mean, we can see that Bitcoin is currently experiencing the largest capital outflow event in history.
As mentioned earlier, the industry needs regulatory clarity for the next wave of institutional money to come in. Matt Hancock, Member of the British Parliament called for “liberal” cryptocurrency regulation, saying no country can stop the crypto revolution. Hancock said, “I hate the condescending idea of regulators telling people what they can and can’t do with their money.” Hancock cited the Terra fiasco serving as an example of “market maturation”, while pointing out that there are stablecoins with less risk. His claims align with the idea that the UK has the power to choose whether the “crypto revolution” starts in the UK elsewhere.
I agree with Hancock’s line of thinking and that we should compare this period in the crypto space to the internet in 2001 – despite the dotcom bubble crashing in 2001 the internet was never discredited as technology.