We note that macroeconomic conditions are slowly emerging for the market to further form a bottom. BBG sources report that most Fed officials the previous day supported a slowdown in the rate of increase of the key base rate in the near future. Accordingly, an increase of 50 basis points could well await us in December instead of the 75 points by which the rate has been rising since the summer.

Whilst this sounds good, this change does not mean that the markets have already bottomed out. As experts point out, further consequences from previous key rate hikes of a record 75 basis points await them. In other words, because of the rising cost of financial borrowing, companies will have to continue cutting staff. This will force laid-off people to consume fewer products and services, which will affect other companies’ revenues.

The fall of Bitcoin and other cryptocurrencies

This, in turn, will lead to another wave of layoffs and bankruptcies. In this regard, analysts point out that it is too early to expect a market bottom yet. However, in any case, a lower key rate hike means that the cryptocurrency market is closer to the potential end of a bearish trend than it was before.

What scale of collapse can we expect next? Versions were shared by members of the cryptocurrency community.

When will Bitcoin stop falling

Representatives of analytical company Baro Virtual tried to determine the possible market bottom. They compared the market’s current performance to what happened to it during previous bearish trends. With this comparison in mind, it turned out that the current collapse has not yet turned out to be severe enough.


Traditionally, we remind you that data from the past does not guarantee its repetition in the future. Accordingly, the magnitude of the coin market collapse in 2018 should not coincide with the industry downturn today. The information on the Baro Virtual analysts' study is for illustrative purposes only.


The collapse of cryptocurrencies

For the analysis, representatives of the research company examined data from the WhaleMap platform. In this case, it shows profit and loss (MPL) data for BTC investors, taking into account the execution of onchain transactions.


Typically, thanks to the transparent blockchain, analysts determine when bitcoins arrive at an address, which also allows them to know the purchase price of the cryptocurrency. Then, the moment the BTC is sent - most of the time, though, the coins are sent to an exchange to be dumped later on - is tracked, allowing the value of the sale to be known. Well this allows you to see if the investment was profitable or not.


For example, the amount of ETH on the Etherium network that hasn’t moved in 3-5 years has now fallen to its lowest level in eleven months. As Glassnode representatives point out, there are now 13.93 million of them. This means that even long-term holders are selling their own crypto given what’s happening in the market.

Number of ethers that have been inactive for 3-5 years

Through analysis of previous bearish trends, Baro Virtual analysts have concluded that the cryptocurrency market has previously hit its bottom when losses from such user transactions have matched or exceeded the returns seen during a bullish trend. In other words, investors should have lost at least as much as others had previously earned.

Here is the relevant rejoinder from analysts, cited by Cointelegraph.

The monthly MPL on the WhaleMap platform allows for a fairly accurate determination of the bottom of Bitcoin in most cases. The condition for this is that the current loss volume must be greater than or equal to the maximum profit level during the bull run before.

As the experts point out, the current losses of BTC investors are not yet large enough to talk about a possible market bottom and the so-called capitulation of investors. Here’s a cue from analysts.

The losses are now equivalent to $671 million, with the previous record return being between $1.3 billion and $1.7 billion. Accordingly, it is short between $629 million and $1.02 billion to confirm capitulation.

Comparison of Bitcoin investors’ losses at different time horizons

In the end, experts believe that the market still has room to fall. However, their prediction could easily fall short.

Bitcoin’s share of losses so far is also above the bottom of previous bearish trends.

Bitcoin’s share of losses

Charlie Bilello, founder of Compound Capital Advisors, commented on what’s happening in the cryptocurrency market today.

Bitcoin’s 78 per cent drawdown over the past year is the largest since 2018. At the same time, the collapse has lasted 376 days – which is the second-longest bearish trend. In first place is the 2013-2015 collapse, which lasted 410 days.

What can save the market in the current environment? Binance chief executive Changpen Zhao’s initiative is in a position to improve the situation. As he noted in an interview with Bloomberg, the company is willing to commit up to a billion dollars to acquire “troubled crypto assets”. And if that’s not enough, the exchange will add an additional amount.

Apparently, this includes acquiring the assets of the bankrupt exchange FTX. However, further details of the initiative will be released later. Here’s Chanpen’s rejoinder, cited by Decrypt.

The industry needs a bailout now, not in 2023.

Binance chief executive Changpeng Zhao


We believe that the cryptocurrency industry will indeed survive the current events and become stronger. The current downturn in interest in digital assets is unlikely to last long, and additional measures like showcasing the reserves of cryptocurrency exchanges will help restore user confidence. So the long-term winners will traditionally be the most patient investors.


What do you think about this? Share your opinion in our millionaires’ cryptochat. We’ll discuss other important news there as well.