Bitcoin Chainalysis Through the Bear Market
Bitcoin has been on a rollercoaster ride over the past few years, and the crypto bear market of 2022 was no exception. While the value of bitcoin fell sharply during the summer sell-off – dropping to around $18k – it has since rebounded and is now trading above its pre-crash levels.
Bitcoin’s performance June 1 to Oct. 31, 2022. Image: CoinMarketCap
Bitcoin chainalysis
According to data from Chainalysis, bitcoin valued at $30 billion was withdrawn from exchanges in the weeks leading up to the crash. This suggests that many investors were anticipating a sharp decline in prices and took their bitcoin off of exchanges to avoid losses.
Interestingly, bitcoin held up relatively well during the crash itself. While the overall value of bitcoin fell by around 35%, this was much less than the decline in other major assets such as stocks and commodities.
This signals that bitcoin is becoming more resilient to market downturns and could be a safe haven investment in future bear markets. Bitcoin advocates such as Michael Saylor have been saying this for the last few years.
Bitcoin bear market
Bitcoin has seen a mixed performance in the market during the third quarter of 2022. The cryptocurrency started the quarter on a strong note, with prices reaching $23,027 on August 1st.
However, prices then fell sharply over the next few weeks, bottoming out at $18,803 on September 7th. Prices then recovered somewhat over the rest of the quarter, ending the period around $19,500 as of publication.
Crypto bear market
As expected, the crypto bear market of 2022 saw bitcoin prices tumble significantly from their all-time highs reached in late 2021. After peaking at around $69,000 per coin in November 2021, bitcoin prices fell to a low of around $19,500 by the end of September 2022.
This represented a decline of more than 72% from peak to trough and was one of the biggest drops in value seen in any asset class during the year.
The decline in bitcoin prices was largely driven by a number of factors, including concerns about regulatory crackdowns on the cryptocurrency industry, as well as a general loss of confidence in cryptocurrencies following the collapse of several major exchanges.
Prices were also impacted by a sell-off in other asset classes as investors sought to cash in on gains made earlier in the year.
The road ahead
Looking ahead to the fourth quarter of 2022, it remains to be seen whether bitcoin can continue its recent positive momentum or if prices will once again decline. However, given the overall volatility of the cryptocurrency market, it is impossible to predict which way prices will move in the short-term.
What is certain is that bitcoin earnings will decrease at the next halving on March 1, 2024. Investors will do well to remain vigilant in the markets and do their own research.
