Crypto Bear Market Started Months Before BTC & ETH All-Time Highs
• BTC and ETH bear market started in mid-2021, months before the all-time highs in November 2021.
• Active addresses suggest the bear market could have started in mid-2021, months before BTC and ETH attained all-time highs.
• Analyzing address activity can help to gauge the activity in the ecosystem or how well the ecosystem is being used.
The cryptocurrency market has been on an unstoppable ride in the past few years, particularly in 2021. After the bear market in 2018, Bitcoin (BTC) and Ethereum (ETH) have been on the rise, with BTC reaching an all-time high of over $68,600 on Nov. 10, 2021, according to CryptoSlate data. On the same day, Ethereum (ETH) also reached an all-time high price of $4,864.11, CryptoSlate data shows.
However, a closer look at the data on active addresses reveals a different story. Active addresses indicate that the bear market set in months before BTC and ETH prices attained all-time highs in November 2021. Analyzing address activity can help to gauge the activity in the ecosystem or how well the ecosystem is being used.
Between January and May 2021, active BTC addresses hovered around the 1.2 million mark, breaching it twice in the five months and reaching as high as over 1.3 million, according to Glassnode data. But in June 2021, active Bitcoin addresses reached a low of around 500,000, which could be indicative of the bear market setting in.
Similarly, the number of active Ethereum addresses also started to decline in June 2021. By August, the number of active Ethereum addresses had fallen to its lowest level since January 2021, according to Glassnode data. This could be indicative of investors moving out of the market, as they had already begun to sense the bear market.
The bear market has been further corroborated by the declining Bitcoin volumes. Bitcoin volumes have been on the decline since December 2021, according to Glassnode data. The same trend is being seen in Ethereum volumes, as they have also been declining since January 2021.
The bear market is further evidenced by the declining open interest in the derivatives markets. The open interest in the Bitcoin futures market has been on the decline since December 2021, according to Skew data. Similarly, the open interest in Ethereum futures has also been declining since January 2021, Skew data shows.
It is clear that the bear market set in months before BTC and ETH prices attained all-time highs in November 2021. The declining active addresses, volumes, and open interest in the derivatives market all indicate that the bear market had already set in. As investors become more cautious, it is likely that the bear market will continue into 2022.