About six months ago, bitcoin and many digital assets hit an all-time high and the crypto economy exceeded $3 trillion in value. Today is a different story as most cryptocurrencies are down 57% to over 80% against the US Dollar.
While Cryptos Are Below ATH, 2020 Holders Are Still Green
On November 9, 2021 or 196 days ago, the crypto economy was valued at over $3 trillion, and today it is down about 56% at $1.31 trillion. Six months ago, Bitcoin (BTC) touched an all-time high (ATH) of $69K per unit and today, it is down over 57% in USD value.
The second major asset, Ethereum (ETH), has lost 59.85% since reaching $4,847.57 per ether six months ago. BNB, the fourth largest crypto asset, is down 52.65% after tapping $689 per unit. XRP is not even close to its January 07, 2018, ATH digital asset tapped four years ago when it reached $3.40 per coin. XRP is today down more than 87% against the US Dollar since that 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) touched its ATH seven months ago and USD is down 81.5% in value.
Today’s tenth largest crypto asset, Dogecoin (DOGE) is down 88.8% from Mem Coin’s ATH a year ago. While the prices are down since the high of 2021, crypto investors who bought the digital asset in 2020 have seen it rise in their cryptocurrencies. For example, the price of Bitcoin (BTC) is up 303.28% and Ethereum (ETH) is up 465.70% since 2020.
The same can be said of many of today’s top coins. Binance’s BNB token is up 173.53% and Cardano (ADA) 443.83% in two years. The gains are even bigger for those who bought crypto assets in 2017 as Bitcoin (BTC) is up 1,294.85% from that year. Ethereum (ETH), the second major crypto asset, is up 8,985.15% against the US dollar since 2017.
XRP holders have seen the biggest gains since 2017 as the value of XRP has increased by 31,346.47% during the past four years. 2017 was a bullish time for crypto investors as BTC reached an all-time high price of $20K per unit that year and 2021 was similar in terms of bullish price values.
Strong correlation of crypto with stocks, 289-day bear walks, further capitulation
Market strategists agree that the duration of most bear markets is just under 9.5 months. Furthermore, in recent times cryptocurrencies have been correlated with equity markets and especially with stock indexes such as the Nasdaq 100 and the S&P 500. This could mean that the crypto bear market will not end until the bear run in the stock market is over.
Bank of America strategists recently elaborated that the S&P 500 has recorded a total of 19 bear cycles. The average duration of each cycle was approximately 289 days and the average bottom of the S&P 500 was 37.3% lower than the ATH.
If the cryptocurrency is to follow the pattern, it could mean that the bearish sentiment could last for another three months, if history repeats and the digital asset continues to follow the current correlation with equities. Unfortunately for crypto investors, the S&P 500’s average drop of 37.3% is nothing like the lows seen during the crypto economy’s peak capitulation. The three bitcoin (BTC) bottoms are more than 80% lower than the ATH recorded during the bull run.
While the top ten crypto assets have already dropped 57% to over 80%, the prices could be much lower. An 80% drop 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 at a critical juncture that will move in value one of three ways. For example, the price of bitcoin may briefly consolidate in this area, the price may again move up in a bullish scenario, or the price may drop even lower from here resulting in more capitulation.
Why do you think crypto assets are down 57% from their low to more than 80% of their value highs? Let us know what you think about this topic in the comment section below.
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