Bitcoin Enters Final Phase of Bear Market

The Bitcoin (BTCUSD) network has officially crossed a huge milestone, with over 1 billion addresses created by users since its launch over a decade ago. The milestone comes amid an ongoing bear market, with BTC falling below $20,000 after hitting a new all-time high above $69,000 late last year.

According to Glassnode analytics, the total number of addresses created on the Bitcoin network continues to rise, even as the price of the cryptocurrency dropped to surpass a new milestone reported on social media.

Meanwhile, it looks like following a protracted pronounced decline cycle, a period of market consolidation began. From now on the share of speculative trades in total volume of transactions will decrease, and coins will be predominantly stored rather than played with by most crypto holders which will be more resistant to price fluctuations.

Since deep corrections are not a new phenomenon for Bitcoin, there are many similarities with previous buy-and-hold cycles often dubbed “crypto summers” vs. “crypto winters”. They suggest that we are likely entering the final phase of a bear market. So, at the end of 2018, the BTC price cratered in the region of $6,000, which was broken by a strong price momentum, and the overall drop was 84% ​​from the previous all-time high (ATH). A similar picture can be observed now – after a crash from the $30K area and a subsequent brisk downfall (in June, Bitcoin showed a record monthly decline in the last 10 years).

As in previous crises, a group of long-term holders (LTH) is being tested for resilience. On average, the unrealized loss per account now stands at 33%. This is not the worst loss in history, in fact, which indicates the possibility of further moderate price meltdown. Also, statistics suggest that the final bearish phase has just begun, and consolidation may last more than a year.

In addition to LTH, the beginning of the final phase is evidenced by the capitulation of the coin miners: their income decreased to 50% of the average annual level (Puell indicator), which forced some of them to give up their mining farms – especially, eyeing robust increase of energy costs.

Capitulation of miners in 2018-19 lasted around 4 months, while now the new cycle has history of only one month. Miners hold around 70,000 BTC (Glassnode estimate) or $1.3 billion in their holdings. Public mining companies sold more coins in May than they mined in a month as they lack funds to cover operating costs. In case of prolonged consolidation, they will be forced to ramp up selloffs.

Again, most metrics show that the market is entering the final bearish phase, but at the moment there are no signs of a quick exit from it. Miners, as well as a number of still-sound crypto investment projects, are facing a crisis that is forcing them to sell their holdings of cryptocurrencies at low prices. At the same time, the U.S. Federal Reserve will continue to tighten monetary policy, and the global economy may plunge into recession in the next 12 months.