Roughly six months ago, bitcoin and a number of digital assets reached all-time highs and the crypto economy crested above $3 trillion in value. Today is a different story as a great majority of cryptocurrencies are down between 57% to over 80% against the U.S. dollar.
As Cryptos Fall Against ATHs, 2020 Holders Still in the Green
On November 9, 2021, 196 days ago, the crypto-economy was valued at over $3 trillion, and today it is worth around 56% less at $1.31 trillion. Six months ago bitcoin (BTC) hit an all-time high (ATH) at $69,000 per unit and today it is down over 57% in USD value.
The second leading asset, ethereum (ETH), has lost 59.85% after reaching $4,847.57 per ether six months ago. The fourth-largest crypto asset BNB is down 52.65% after tapping $689 per unit. XRP is not even close to its January 07, 2018 ATH the digital asset tapped four years ago when it reached $3.40 per coin. XRP today is down more than 87% against the U.S. dollar from that point in time.
Cardano (ADA) hit its ATH nine months ago at $3.10 per ADA and currently ADA is down 83.5% against the US Dollar. Solana (SOL) hit its ATH seven months ago and is down 81.5% in USD value.
The tenth-largest crypto asset today, dogecoin (DOGE) is down 88.8% from the meme coin’s ATH a year ago. While prices are down since 2021’s high, crypto investors that purchased digital assets in 2020 have seen it their cryptocurrencies rise. For instance, the price of bitcoin (BTC) since 2020 is up 303.28% and ethereum (ETH) is up 465.70%.
The same can be said for most of the top coins today. Binance’s BNB token is up 173.53% in two years and cardano (ADA) is up 443.83%. The gains are even bigger for those who bought crypto assets in 2017, as bitcoin (BTC) is up 1,294.85% since that year. The second crypto asset Ethereum (ETH) is up 8,985.15% since 2017 against the US dollar.
XRP holders have seen the most gains since 2017 as XRP has skyrocketed in value by 31,346.47% during the last four years. 2017 was a bullish time for crypto investors as BTC hit an all-time price high that year at $20K per unit and 2021 was similar in terms of bullish price values.
Crypto’s High Correlation to Stocks, 289-Day Bear Runs and Further Capitulation
Market strategists estimate that most bear markets last just under 9.5 months. Also, in recent times, cryptocurrencies have been correlated with stock markets and specifically stock indices like the Nasdaq 100 and S&P 500. This could mean that the crypto bear market will not end until the The stock market’s downward run will not be over.
Bank of America strategists recently detailed that the S&P 500 has recorded a total of 19 bear market cycles. The average duration for each cycle was roughly 289 days and the S&P 500’s average bottom was 37.3% lower than the ATH.
If cryptocurrencies are to follow the pattern, it could mean that the bearish sentiment could last for another three more months, if history repeats itself and digital assets continue to follow the current correlation with equities. Unfortunately for crypto investors, the 37.3% average drop in the S&P 500 has nothing to do with the lows the crypto economy has seen in extreme capitulation. Three bitcoin (BTC) funds were more than 80% below recorded ATHs during the bull cycle.
While the top ten crypto assets are down 57% to over 80% already, prices could go much lower. An 80% drawdown from BTC’s $69K high would be $13,800 per unit and an 80% cut in ether’s ATH value would result in a price of $970.
Currently, crypto assets like BTC and ETH are seemingly at a crossroads that will take value in three ways. For example, the bitcoin price could consolidate in this region for a while, the price could also rally in a bullish scenario, or the value drops even lower from here leading to further capitulation.
