The wise advice about knowing your past to predict your future. In evaluating whether Bitcoin has eventually bottomed amidst the current bear market, Glassnode, an on-chain analytics firm, assessed and compared the duration and characteristics of past bear cycles to the present one.
The report ‘Pressure Builds on Diamond Hands’ showed Glassnode evaluating points where the previous bear market printed a bottom for Bitcoin. Glassnode revealed that the period emerged whenever downward momentum began fading, sellers hit exhaustion and forced sales to appear.
Wealth Redistribution
Glassnode suggested that wealth redistribution among the remaining stakeholders is the crucial feature of an extended bear market. That means digital tokens increasingly fluctuate among investors that persevere in prolonged bearish markets.
Glassnode noted that the Bitcoin bear market between December 2017 and March 2019 saw a massive redistribution after the asset dipped inside the $3,000 – $4,000 level. That emerged after BTC hit its $6,000 all-time high.
Gauging that with the current bear markets, Glassnode noted that redistribution patterns showcased after Bitcoin price plummeted to the $30K floor. Meanwhile, BTC changing hands intensified as the leading crypto fell towards the $20,000 value area.
Losses Sent to Long-term Investors
The Glassnode reports added that crucial indicators of bottom within bearish markets are when near-term investors quit the marketplace and the tokens (held at a loss) go to entities with solid conviction (and somewhat price-insensitive) the long-term holders.
As the ongoing bear market hasn’t bottomed, Glassnode noted that the previous bear market’s depth had supply portion by long-term holders (at a loss) reached beyond 34%.
On the other side, the proportion controlled by small-time holders plunged to 3 – 4%. For now, these small-time holders hold 16.2% supply at a loss, indicating that newly redistributed tokens should undergo the maturation process in long-term holder hands.
What About Miner Capitulation?
Considering the income stress and hash rate slump, Glassnode discovered miner capitulation as a factor in determining bear market bottoms. The analytic platform concluded that the 2018 – 2019 miner capitulation took about four months. Meanwhile, the ongoing cycle began only a month ago.
Miners currently hold around 66.9K $BTC, and the next quarter will likely see more distribution unless meaningful recoveries emerge.