Note that there is no consensus on what is happening in the coin market among cryptocurrency analysts. For example, earlier this week we got to know the views of independent analyst Miles Johal. In his opinion, the decline phase is over and cryptocurrencies are on the rise, if only because of the growing number of coins in wallets that are not moving. On top of that, there are also fewer bitcoins on the exchange, which is a positive sign.

At the same time, Glassnode’s analysts shared a negative version of this. According to their data, cryptocurrency user activity has recently sagged significantly – and this, among other things, opens up the possibility of a prolonged bearish trend. You can read more of their version in a separate piece.

What’s next for cryptocurrencies

Edwards mentioned quite a few prerequisites for the bull run, both in the crypto market itself and in macroeconomics. So, one of them is the volume of value transferred in the blockchain at a loss, i.e. the volume of coins that are sold at a loss. Here is the expert’s rejoinder.

The percentage of total BTC supply transferred at a loss reached 1.9 percent last month. Historically, when this figure reaches the 1.5 percent mark, most of the market is “in pain.” In most cases, this is also the starting point of cryptocurrency accumulation zones.

Accordingly, current conditions resemble a situation where the main wave of liquidation and capitulation in the cryptocurrency industry has taken place. Well beyond that, experienced investors who have had time to get out of positions and prepare staplecoins for purchase begin to spend them to acquire coins at lower prices.

Share of blockchain transactions at a loss

According to Cointelegraph sources, the second factor is the image of digital assets outside the crypto market. The number of search queries about the “death of Bitcoin” has peaked in the past few months, meaning that even newcomers who are not connected to the coin niche are interested in the collapse of the market.

Trends in the number of “Bitcoin is dead” searches on Google

Another important factor on the scale of the crypto market is the noticeable reduction in the balance sheets of short-term Bitcoin holders, that is, those who have purchased coins within the last month. Whereas in November 2021 they held about 90 per cent of the market, their share has now shrunk to 58 per cent.

Consequently, the owners of these coins have exited the positions, including at a loss - especially if you consider the rate of market decline in May 2022 due to the collapse of the Terra ecosystem.

Changes in the amount of BTC in the wallets of short-term cryptocurrency holders

Finally, Edwards didn’t forget to mention the worst inflation-adjusted returns of the S&P 500 stock index since 1872. Here’s the relevant chart.

Inflation-adjusted returns of the S&P 500 stock index

These are all clear signs of “capitulation”, i.e. the final stage of a bearish trend in both crypto and macroeconomics. The worst phase of the downtrend may indeed be over, but that does not guarantee that there will not be more local falls in Bitcoin.

The trigger for such collapses could be negative news, one of which the day before was the closure of cryptocurrency exchange bank accounts at some banks in Portugal. Several leading banks in the country recently closed the accounts of CriptoLoja, the first cryptocurrency exchange in the Portuguese jurisdiction to receive a license to operate. It looks like the country will now not be as digital asset friendly as it used to be, Cointelegraph reports.

A sharp collapse in the cryptocurrency market


We think it's impossible to make unequivocal statements about the situation in the cryptocurrency market now - as well as always. Still, the current bearish trend is complemented by a difficult situation in the global economy, similar to the problems with inflation and recession in the US. How exactly that will affect the coin market is unknown, for it is also very hard to predict the actions of sometimes irrational investors. So in this case we just have to wait and see how the situation develops in practice.