Bitcoin may be in for a sustained bear market, according to blockchain analytics firm Glassnode.

With the price of Bitcoin now well below $40,000, the firm’s latest market report cites a number of “bearish headwinds,” including falling on-chain activity on the Bitcoin network and over 4.7 million BTC now held at an unrealized loss.

According to the report, the downturn for both the crypto market and traditional equities is a reflection of broader market uncertainty surrounding looming interest rates hikes by the Federal Reserve, conflict in Ukraine, and civil unrest in Canada—the latter of which has resulted in the freezing of bank accounts and Bitcoin funds of those participating in ongoing convoy protests in Ottawa.

Meanwhile, the Federal Reserve has been threatening to raise interest rates for months in an effort to combat record inflation impacting the U.S. economy. Higher interest rates hurt investor confidence for investing in risk assets, which Bitcoin tends to correlate with.


GIven Bitcoin’s prolonged downtrend, Glassnode researchers now say that it has a higher likelihood of staying down. “The longer that investors are underwater on their position, and the further they fall into an unrealized loss, the more likely those held coins will be spent and sold,” the report reads. At the moment, over 25% of all network entities are in a negative position. 

The number of active Bitcoin addresses sat at about 275,000 this week compared to over 350,000 in January of last year. Weak network activity is interpreted as a bear market signal, though the number of dedicated holders continues growing long term. Nevertheless, Glassnode found that 219,000 addresses had been emptied over the last 30 days. This may mark “a period of net outflows of users from the network,” like in May of 2021. 

What comes next?

Glassnode’s report concludes that crypto bulls “have their work cut out for them” given the numerous on-chain and off-chain bearish forces that they’re currently up against. However, compared to previous bear markets, supply-side dynamics look relatively optimistic. Long-term investors appear more likely to cling to their Bitcoin, using derivatives to hedge risk rather than selling their direct asset exposure, says the firm.

“It looks like a bear market,” states Glassnode, “But do keep in mind, that longer term, the bear authors the bull that follows.”


Despite the hopeful outlook, investors who purchased anywhere near the top may be feeling less optimistic at the moment: Bitcoin is now down nearly 45% from its all-time high of $69,000.


The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

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