The current report published by CryptoQuant, which provides analysis and data in crypto markets, revealed that the current correction in Bitcoin has moved away from past bear market cycles. The report states that the recent pullback in prices does not conform to the characteristic patterns that marked the bear markets of previous years. Losses between long-term and short-term investors have not approached the lows seen in the past this cycle.
Losses for Short-Term Investors Are Significantly Lower Than Historical Averages
According to CryptoQuant’s eight-year data set, permanent bottoms in Bitcoin typically occur when short-term investors lose significantly. While the loss rate increased to 83 percent in 2014 and 2015, this rate was measured as 62 percent in the 2018-2019 cycle. In 2019-2020, the loss of short-terms reached 57 percent, and in the 2021-2022 period, the loss rate reached 71 percent, and it was seen that the market began to balance at these levels. On average, short-term investors’ losses before market bottoms approached 68 percent.
However, in the last correction, the loss suffered by short-term investors was limited to only 40 percent. After falling to the level of $66,928, the Bitcoin price recovered and rose above the $70,000 limit again, and the rate of losses dropped to 31 percent. This rate remains at a very mild level compared to previous bear market conditions.
No Panic Observed in Long-Term Investors
The report points out that not only short-term investors but also long-term investors are largely unaffected by bear market conditions. It has been calculated that long-term Bitcoin holders currently have an average profit of 27 percent. In the past, in harsh bear cycles, long-term investors also suffered serious losses and panic sales increased in the following period. This time, a similar mass sales behavior is not observed.
CryptoQuant stated that there is no data indicating a mass loss reaching panic levels in the market or losses falling to the bottom levels.
Correction Period Also Does Not Match Past Cycles
Looking at past cycles, it is recorded that bear markets lasted an average of 378 days. Yet the current withdrawal process has only been going on for about 88 days. In addition, the loss did not exceed 40 percent in the last withdrawal, causing the selling pressure to ease earlier. In previous bear cycles, when short-term investors were close to 70 percent in losses, it was necessary to wait months for the market to recover.
According to CryptoQuant’s analysis, this correction, combined with the rapid recovery now taking place and the shallower level of losses, does not bear the typical indicators of starting a widespread bear market.
CryptoQuant made the evaluation: “The market does not behave like a traditional bear cycle; it is noteworthy that there are no losses approaching the panic level spread across short and long-term participants.”
The report suggested that the current decline stands out as a correction within a broad market structure rather than a deep and protracted bear cycle. It is unclear whether this divergence in the market is due to reasons such as structural maturation or the increasing faith of investors.
