New market patterns have emerged as a result of the decline in the cryptocurrency industry. Bitcoin has experienced some first-of-its-kind movement after the most recent crash. Given that the future movements of the digital asset are being tracked, the consequences for these are enormous. This has demonstrated how unique the current bear market is compared to every single one that came before it.
Bitcoin Reaches Cycle Low
One pattern that bitcoin has consistently followed is that its price has never dropped below the cycle peak. This trend has persisted throughout all of the past bear markets, serving as a kind of lighthouse for predicting the bear market’s bottom. This is why many analysts used this trend to predict the bottom of the bitcoin price.
But as of right now, the cost of bitcoin has for the first time ever dipped below its prior cycle apex. This took place when the value of the digital asset dropped to a low of $17,600 after breaking beyond the $20,000 barrier. The price of the cryptocurrency has subsequently rebounded from this low point, but it had already established a new precedent that the price does not always remain above its prior cycle top.
The effects of such changes are numerous, but one is obvious: bitcoin’s potential decline. Combining this with bitcoin’s failure to hold over $19,000 and the fact that prior cycle lows have always exceeded 85% of its all-time high, a decline to $12,000 is still possible.
The Mayer Multiple had decreased below its prior cycle low, according to Glassnode. It had previously reached a low of 0.511, but in June it reached a new low of 0.487. Only 2% of the 4,160 trading days included in the research’s data had an MM below 0.5, according to the report. The underlying models that are used to value the digital asset have changed as a result of this.
Investor Confidence in Crypto Drops
The market’s investor mood has been deteriorating for a while. The Fear & Greed Index is currently experiencing one of its longest periods of time in the extreme fear region, and it doesn’t appear that this will soon change. It’s interesting to note that the index likewise finished the previous month in the extreme terror range.
The inflows of exchanges also demonstrate this sentiment. According to Glassnode Alerts, BTC entered exchanges last week alone at a rate of around $5.6 billion. Although there were more outflows than inflows, the sheer amount of trading on controlled exchanges indicates that sell-offs are still the norm.
The positive net flows of $4.3 billion from Tether inflows over the previous week, however, portray a healthier image of the cryptocurrency market. This shows a return to investor optimism as stablecoin holders are shifting their holdings to exchanges, perhaps to invest in other cryptocurrencies.