Cryptocurrency

Crypto Bear Market 2022 Worst in History? Comparison with 2018 Bear Market

Crypto 2022 vs 2018 - How 2022 Differs From 2018

Introduction

The crypto market has always surprised many ever since its inception back in 2010. From single crypto in circulation to more than 18,000 presently, the crypto space has evolved itself magnificently. In recent times, cryptos, specifically Bitcoin, is considered as one of the safest crypto investment. The ROI at the press time is close to 15,000% which is considered the highest compared to all the other traditional assets. 

However, the evolution cycle also includes a couple of major crashes which enabled new players to enter the space. The major bear market began just after the BTC price marked its highs close to $19,000 in 2017. The next bear market was considered soon after the asset marked its highs at $69,000 until the press time. 

Also Read: What is Crypto Bear Market?

Are the patterns followed in both the bear markets the same or 2022 is different from 2018? If the trend is the same, will the markets rebound firmly as they did earlier? 

Let’s check it out!

Bitcoin Price During the Bear Market

Bitcoin price began its trade with a double-digit figure and soon in no time surged magnificently. The price chart itself indicates the price inflated heavily since its inception, including a couple of pullbacks and crashes too. One such massive crash occurred soon after BTC’s price hit its ATH in 2017. The markets remained drained throughout 2018 and consolidated until they found their bottoms by the end of 2018. 

Crypto Bear Market

Source: Tradingview

Bitcoin during the 2018 bear market had plunged hard by nearly 81.39% to mark its lows at $3200. Similar price action was witnessed in recent times when the BTC price marked new highs at $69,000. A massive drop of nearly 74.23% has been carried out over the past 6 to 8 months. 

While the 2018 bear market went on throughout the year, it appears that the current descending trend may continue until the end of 2022, slashing the price by another 10% to 12%. However, it was believed that the BTC’s realized price was somewhere close to $23,000. Therefore, the asset plunges below these levels only during the end of the bear market. 

The claim currently does not hold good as the asset is trading below these levels for quite a long time, with fewer possibilities of a strong rebound. 

Is the 2022 Crypto Crash Unfavorable than Previous Ones?

The 2017 bull run was fueled as numerous tokens were rolled out as ICO was gaining huge attention. Only the fundamentally strong tokens sustained the crash after the bubble blast, while many tokens were rugged. While the BTC price dropped by nearly 85% then, the active addresses dropped heavily from 1.2 million to as low as 400K. However, the present scenario is a little diverse. 

Presently, as mentioned above, the BTC price has slashed by nearly 75% from its highs and is expected to plunge by another 10% to 15%. But the active addresses remain consolidated at around 1 million despite the price kept on sliding down. Therefore, despite external factors impacting BTC price being numerous presently compared to that of 2018, the traders maintain their confidence over the upcoming rally. 

Also Read: Crypto Crash Reason 

BTC Price Below 200-Day MA Since the Beginning of 2022

The 200-day MA levels are considered important levels in all time horizons. These average levels act as strong resistance & support levels depending on the price actions. Currently, the asset has been trading below these levels for nearly 6 months, similar to that of the bear market trend in 2018. The asset was trading below 200-day MA levels for almost a year during the 2018 bear market. 

Crypto Bear Market History

Source: Tradingview

 

The BTC price, previously in 2018, has traded below these levels for nearly 400 days. No doubt, the asset plunged below these levels multiple times but maintained an extended period only during the bear markets. On the other hand, the volume during then was around 13.77 million and in just 180 days of the bear market presently. 

The volume recorded had already surpassed 10.31 million. Therefore, the bottoms of the current bear market could be pretty close. 

Also Read: How to Prepare for a Crypto Market Crash?

Bitcoin’s Realized Price at 11% Discount

The realized price which illustrates the average price at which the BTC in circulation was bought is higher than the present price. The realized price is somewhere around $23,300 while the asset is trading at around $20,000. Therefore, the spot market is currently trading at a discount of 11% which indicates the BTC bottom is approaching fast. 

Additionally, Bitcoin’s MVRZ Z-score which is the difference between the market value and the realized value is pretty undervalued at the press time. However, these levels have reached the rock bottom levels during the 2018 & 2020 market crashes. 

2018 2022
Duration of the Bear Market 18 Months 7 Months
BTC’s ATH Before the Crash $ 19,114 $ 67,566
BTC Lows Registered During Crash $ 3252 $ 17,709
Bitcoin Active Addresses 966,701 1,041,542
BTC Total Address 354 million 976.5 million

Ethereum Price During the Bear Markets

The second-largest crypto, Ethereum crashed hard compared to that of Bitcoin during both the bear markets. While BTC’s price slashed 81% in 2018, ETH’s price tanked down by more than 94%. During the 2022 bearish trend too, ETH price has already declined by more than 82% compared to 74% of Bitcoin. 

Crypto Bear Market History

The ETH price collapsed from its highs around $1390 to the levels below $100 to hit $86 with a more than a 90% drop. Presently, after recording highs very close to $5000 at $4921, the asset experienced a free fall registering the lows at $880 at the press time. However, as per some reports, the asset is expected to record new lows before rising above the descending trend. 

On the other hand, Ethereum is now the leader in the DeFi space with TVL having exploded above $65 billion. Many platforms were launched on the Ethereum chain like Uniswap, Compound, Yearn, etc which attracted the other blockchains onto the DeFi space. 

2018 2022
Ethereum’s ATH Before the Crash $1,396 $4,812
Ethereum’s Lowest Levels During the Crash $86.54 $896.11
Ethereum’s Total Address 20 million 154.9 million
Total Value Locked on DeFi $41,000 $66 billion

Impact on BTC’s Fundamental Value

The fundamental value of the cryptos are pretty hard to determine as they have no corresponding assets or returns. However, the value is drawn depending on the demand and the supply. Therefore, by maintaining the scarcity of the asset, the demand is raised compared to that of supply. 

It is a known fact that the maximum BTC tokens that can be mined is capped to 21 million. Out of which nearly 16.7 million were in circulation when the asset marked its ATH in 2017 and raised to 17.43 million by the end of the 2018 bear market. These values were increased to 18.86 million as BTC marked its ATH in 2021 and currently more than 19 million tokens are in circulation. 

While the number of new coins generated is controlled by halving, a significant pressure on demand is generated.On the other hand, the realized price has gone negative only a couple of times in the history, mainly during the bear markets & remained higher all the time.  Hence changing the fundamental value of BTC positively. 

During the Crypto Crash 2022! The Government of India as implemented 1% TDS on Crypto starting July 1,2022 along 30% Tax, to know more read the guides below:

Guide to 1% TDS on Crypto

Guide to 30% Crypto Tax in India

Wrapping-It Up!!

Bitcoin, the primitive crypto’s price action is closely monitored by many as it illustrates the upcoming trend of the entire crypto space. A minor surge of 3% to 5% in BTC price, elevates the prices of altcoins by more than 10% to 15% and a similar trend is witnessed during the bearish trend. 

Collectively, the bear markets no doubt squeeze huge gains, but are required to prevent the cryptos from being inflated. Moreover, new participants also jump in which raises the adoption and demand. While the 2018 crash was harsh, 2021-22 is said to be more brutal. But the adoption and the attention gained during the 2021 bull run has induced huge strength within the asset. Hence mirroring a little contrast trend compared to 2018.  

Read more articles on Crypto Bear Market below: 

  1. Top Crypto Bear Market Indicators
  2. How to Prepare for Crypto Crash
  3. Crypto Bear Market Survival Guide
  4. What is Crypto Winter?

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. In case you have any queries, write to [email protected].

The above information represent the independent views of Primestack Pte. Ltd, Neblio Technologies Pvt. Ltd, and/or their affiliate entities and are for informational & educational purposes only. The content, information or data provided above is not an offer, or solicitation of an offer, to invest in, or to buy or sell any interest or shares, virtual digital assets/ crypto products or securities, or to participate in any investment or trading strategy. Any statement or communication made above shall not be treated as a legal, financial, investment or tax advice by the reader. The calculations, data, risk-return formulations, performance or market capitalization indicators captured above are based on the independent data sourcing including collation of public information and/or analysis performed by analysts, advisors or employees of Primestack Pte. Ltd/ Neblio Technologies Pvt. Ltd and/or their affiliate companies and/or any third party. Past performance is not indicative of any future results. The reader(s) are hereby advised to consult their financial/ legal/ tax advisor(s) before making any investment.


 

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