Crypto trading platform BitMEX is revealing one metric that it says could signal the end of the bear market.
In a new blog post, BitMEX says that based on Bitcoinโs Market Value to Realized Value Ratio (MVRV), BTC is currently early in the bear cycle compared to previous bear markets.
MVRV is the ratio of an assetโs market cap versus its realized capitalization โ the value of all Bitcoin at the price they were bought not the current price.
โLooking at the other three key bear market cycles and measuring them by the Market Value To Realized Value Ratio, price was below realized price for an average of 244 days. (That estimate excludes the March 2020 period in the third bear market.) Currently, weโre at less than 30 days with the price being below realized price.โ
According to BitMEX, Bitcoin could start recovering from early next year based on the average period of previous bear cycles.
โThe 244-day blended average of previous time-based capitulation periods (prolonged periods below average market participant cost basis) would see bitcoinโs recovery above the realized price level take place in early February of 2023.โ
The crypto firm says that the current Bitcoin bear cycle โdoes not look all that differentโ from previous cycles despite the dissimilar macroeconomic conditions.
โWhile much has been written about the macroeconomic backdrop regarding the bitcoin market (with our analysis assuredly included), this bitcoin cycle ironically does not look all that different from the cycles of the past.
At the time of writing, bitcoin is 69.72% below previous all-time highs, with the peak of the drawdown reaching 71.86% on May 18. Bear markets of bitcoinโs past saw drawdowns of 93.08%, 84.82% and 83.47% respectively. With this in mind, despite the absolute size of this cycleโs drawdown dwarfing previous cycles, in relative terms this was nothing out of the ordinary for bitcoin.โ
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