Bitcoin, the largest cryptocurrency recently gathered some strength to push outside the resistance zone. At press time, BTC surged more than 4% to reach the $37.7k mark. This might sound decent however, the king coin suffered major blow from its previous ATH, $64k last year. Indicators still signal at a bearish trend concerning BTC.

Fear and Greed index, at the time of writing stood at 23, signalling ‘Extreme fear’. According to famed crypto trader/ analyst, Rekt Capital‘s poll on Twitter, more than 50% supported the aforementioned narrative.

Is #BTC still in a Bull Market or a new Bear Market?$BTC #Crypto #Bitcoin

— Rekt Capital (@rektcapital) January 22, 2022

#Bitcoin bulls have been put firmly on the back-foot, with prices cut in half since the Nov ATH.

In our latest analysis we seek to define whether #Bitcoin has entered a prolonged bear, using investor psychology, behaviour, and network profitability.https://t.co/4N1FKeHZHM

— glassnode (@glassnode) January 24, 2022

Glassnode, a leading on-chain metric analysis platform published their latest “The Week On-Chain” newsletter to highlight this possible bearish trend.

It established the “likelihood that a prolonged bear market is in play” by “using historical investor behavior, and profitability patterns” as guide. One thing’s for sure, the recent crash was severe, and “such a heavy drawdown is likely to change investor perceptions and sentiment at a macro scale,” the report added.

Well, According to Glassnode, the said crash was “the second worst sell-off since the 2018-20 bear market, eclipsed only by July 2021, where the market fell -54% from the highs set in April.”

#Bitcoin is down ~50% from the November ATH, making this the second deepest drawdown in this halving cycle.

Corrections in 2017, and early-2021 were much shallower between 20% and 40%, whilst July 2021 reached a drawdown of -54%.

Live Chart: https://t.co/bglPBJAD7J pic.twitter.com/tB9U5ihpL5

— glassnode (@glassnode) January 23, 2022

Apart from the price, investors “capitulated over $2.5 Billion in net realized value” on-chain this week. Who were those paper hand investors? Well, the lion’s share of these losses were attributed to ‘Short-Term Holders.’

Here are a few indicators

Bitcoin’s NUPL was currently at 0.361 which indicates that an equivalent to 36.17% of the Bitcoin market cap was held as an un-realised profit. The lowest level of network profitability (since July 2021) hinted at an ‘early bear’ phase.

This came in stark contrast to the much higher profitability values of ~0.75 set in March, and ~0.68 set in October last year. Even though the difference was sustained, the said metric at least commenced an optimistic route (yellow).

How does this point to a bear market?

“Considering previous cycles, such low profitability is typical in the early to mid phase of a bear market (orange). One could also reasonably argue that a bear market started in May 2021 based on this observation.”

At the time of writing, the MVRV Z-Score stood at 1.004. As per Glassnode, the market was within territory visited in bearish markets. A bearish divergence was pictured similar to the NUPL metric above.

Source: Glassnode| MVRV Z-Score

According to Glassnode,

“The bulls either need to step up in a big way, else the probabilities favor the bears. That said, a relief bounce in the near term is also probable if history is to act as a guide.”

Source: Glassnode| RTLR

In the chart above, the market was trading below the RTLR price of $39.2k, but above the Realized price of $24.2k. Again, this was often observed during early to mid stage bear markets.

There’s no surprise here. The Bitcoin market witnessed heavy losses. The Net Realised Profit/Loss metric proved this narrative.

“As the market traded down to the weekly lows on Saturday, over $2.5 Billion in net losses were realised, with investors spending coins held at a loss. This marks the largest capitulation event of this drawdown, and almost matches the $2.61 Billion net loss from May 2021.”

The graph below highlighted the same concern.

Source: Glassnode|NRPL

Needless to say, Long-Term Holders (LTHs) appeared unfazed by such a severe drawdown. Overall, the Bitcoin cycle might be dead. Or maybe we’re just in a bear market as Glassnode metrics seem to suggest. Either way, it is quite clear that LTHs are not selling and that may bring about positive action in the future.