Crypto trading platform BitMEX has revealed a metric that can be used to determine the end of the bear market.
Based on Bitcoin’s Market Cap to Realized Value (MVRV), BitMEX says in a new blog post that BTC is currently in the early part of its bear cycle compared to previous bear markets. MVRV is the ratio of an asset’s market value to its actual value. With this indicator, it is tried to determine how close or far a cryptocurrency is from its “fair value”.
“Looking at the other three major bear market cycles, and as measured by the Market Cap to Real Value Ratio, the market price was below the actual price for an average of 244 days. (This estimate does not include the March 2020 period in the third bear market.) Currently, the market price has been below the actual price for less than 30 days.”
According to BitMEX, Bitcoin could start to recover from early next year based on the average duration of previous bear cycles.
“The 244-day blended average of previous time-based bearish periods indicates that Bitcoin’s recovery above the realized price level will occur in early February 2023.”
Additionally, the crypto firm added that the current Bitcoin bear cycle “does not look that different” from previous cycles despite different macroeconomic conditions.
“While much has been written about the macroeconomic backdrop of the Bitcoin market (including our analysis), this Bitcoin cycle, ironically, doesn’t seem all that different from the cycles of the past.
At the time of writing, Bitcoin is 69.72% below its previous all-time highs, with the peak of the decline reaching 71.86% on May 18. Bitcoin’s past bear markets saw drops of 93.08%, 84.82%, and 83.47%, respectively. With that in mind, despite the absolute extent of this cycle’s decline, which eclipsed previous cycles, this was relatively nothing out of the ordinary for Bitcoin.”
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Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.