This Classic Bitcoin Metric is Now Green, Flashing Buy for the First Time Since March 2022

These Metric Suggest that Bitcoin Bear Run is Not Over Yet

Bitcoin’s price hitting USD20K feels scary, doesn’t it? But the bear run might not be over yet!

BTC Drop Causes Panic, Makes Even Large Investors Defend Positions 

Bitcoin (BTC) price dropped close to the USD20K mark on Wednesday, 15th, 2022, the lowest point in months, narrowly avoiding breaking the support. However, is the drop over? 

Multiple on-chain indicators show that the bear run might still be on. The stakes are very high for many BTC holders, with about 50% of supply being held at a loss. Even the biggest investors, such as Microstrategy, have had to defend their conviction about the dropping coin. 

Metrics Indicating BTC is Likely to Drop Further 

The following three indicators show that Bitcoin is likely to continue with the drop:

  • Weak Holders are Yet to Get Flushed Out

Even with the drop to an 18-month low, the price of BTC is yet to shake out speculators. A look at the RHODL Ratio from Philip Swift, the creator of on-chain analytics resource LookIntoBitcoin, reveals that further drop is probably on the way. 

RHODL takes the ratio between one week and cohorts of 1-2 years of the Realised Cap HOLD Waves metric, which divides the coins based on when they were last moved. When the RHODL is in the green, it implies that the price drop is at the peak and the floor is imminent. For Bitcoin, RHODL is yet to get into the green, indicating that a further fall is likely. 

  • BTC Holders Under Water are Not Enough

There is a sort of feeling that the entire BTC market is losing, but many still feel that USD20K per coin is still worth holding onto. They hope for a rebound. 

According to crypto CryptoQuant, an analytics platform, it is only 46% of the BTC that is being held at a loss. Therefore, it cannot be capitalised as macro capitulation. About 60% of the supply should generate unrealized losses to qualify as capitulation. 

  • Miners are Not Yet Surrendering

Selling Bitcoins at USD30K other than USD20K can help to cover most of the mining production costs, but miners are yet to start using the hoarded BTC to meet their expenses. Despite this, BTCs are moving to the exchanges at the highest rate over the last seven months. Therefore, the hash rate for the Bitcoin network is yet to take a significant drop, which is expected during the price pressure. 

What Would Bitcoin Drop By 80% Look Like?

With a further dip likely in the coming weeks or months, some traders are concerned about what would an 80% fall look like? 

A fall below USD19K is likely to erase the previous pre-halving price highs. Therefore, mining Bitcoin could become unprofitable for miners unless they get more sustainable sources of electricity to run their rigs. 

With crypto companies like Coinbase and Gemini starting to lay off staff because of the current market crash, an 80% drop is likely to see even additional layoffs. More companies are also likely to crash. When Bitcoin’s price tumbled to USD25K in early May, the Terra ecosystem collapsed, crushing its algorithmic stablecoin UST and wiping off billions of funds from investors. Similar scenarios are likely if BTC drops significantly. 

Despite the persistent bear market, one coin has posted impressive performance. On Wednesday, Chainlink (LINK) rose to USD6.87 from a low of USD5.88 that was reached on Tuesday. However, Polygon (MATIC), the 20th largest crypto, fell by close to 10%. 

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