Bitcoin (BTC) spending an “unprecedented” period below a key moving average is a poor guide to the 2022 bear market.
Analyst Superswell thought so, as of this week championed on-chain calculations as a way to understand current BTC price action.
“Business as usual so far” for the Bitcoin bear market
In a series of tweets on December 5, Superswell challenged those concerned that the 200-week simple moving average (SMA) was disappearing as support on BTC/USD.
“Over the last few months I’ve seen quite a few people point out that BTC’s failure to find support at the 200wkSMA is unprecedented and therefore we’re in uncharted territory – especially considering how much time we’ve spent below,” part thread read .
“This is where I personally feel that onchain data provides better information on where we are relative to historical capitulations than the TA (ie: 200wkSMA).”
BTC/USD fell below the 200 SMA in mid-August, taking its stint with the trendline as resistance to nearly four months – a record, as confirmed by Cointelegraph Markets Pro and TradingView.
As Cointelegraph continues to report, however, on-chain data tells a different story, gathering bear market bottom signals for weeks or longer.
Superswell highlighted four in particular from research firm Glassnode in the chain: percentage in profit, percentage volume in profit, adjusted used production profit ratio (aSOPR) and market value versus realized value (MVRV).
While these have so far not beaten (or in some cases, even matched) previous bear markets, this is no reason to fear the worst, Superswell continued.
“From a chain perspective, this is business as usual *so far* for a macro bottom and bear market,” he wrote.
“This is not to say that *because* these levels have been hit, we have therefore bottomed out.”
One example came in the form of percent volume in profit – a chart showing what portion of transaction volume involved coins moving at a higher price than they did last time.
Currently trending down, the metric needs to begin an uptrend — a series of higher swing lows and swing higher highs, which Superswell says will “confirm a macro reversal.”
“This is just one example of *one* reversal pattern. There are many to look for,” he says.
Hopes for BTC Price “Macro Regime Shift”
Meanwhile, Glassnode itself also targeted profit and loss, which Superswell described as “*the* invisible hand” in the market, for macro signals this week.
Related: How Much Is Bitcoin Worth Today?
In the latest edition of the weekly newsletter, “The Week On-Chain”, researchers noted that losses exceeding gains have “historically coincided with a shift in the macro market regime”.
An accompanying chart showed the ratio of realized losses in the chain versus realized gains – in other words, the ratio of loss-making transactions in the chain to those executed in profit.
“Here we can observe that the ratio between realized profit/loss has registered a new low point ever,” summarized Glassnode.
“This indicates that losses locked in by the market were 14 times larger than profit-taking events. It is likely that this partly reflects how the full cycle price action for 2020-22 is above the spot price.”
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.