2022 realized cap drawdown was second worst in Bitcoin’s history

Analyzing Bitcoin’s marketplace headdress shows that the 2022 carnivore marketplace brought the 4th worse drawdown from the all-time precocious successful its history. Bitcoin’s driblet to $15,500 represents a 76.92% drawdown from its ATH.

Market capitalization is 1 of the astir wide utilized metrics erstwhile estimating the size and worth of an asset. Defined arsenic the combined worth of each units of an asset, marketplace capitalization is calculated by multiplying the terms by the circulating supply.

When it comes to Bitcoin, marketplace capitalization and its fluctuation is often utilized to find the spot and adoption of the network. It’s besides particularly utile erstwhile comparing Bitcoin to different assets and markets.

The astir important terms drawdown from ATH happened astatine the extremity of 2011 erstwhile an assertive carnivore marketplace wiped retired 91.78% of Bitcoin’s marketplace cap. Crypto winters successful 2015 and 2018/2019 saw drawdowns of 82.75% and 82.63%, respectively.

This is successful enactment with CryptoSlate’s erstwhile analysis, which recovered that each marketplace rhythm posted higher lows.

Graph showing Bitcoin’s terms drawdown from ATH from 2011 to 2023 (Source: Glassnode)

However, marketplace capitalization fails to correspond the existent authorities of the network. Due to a ample fig of mislaid and inactive coins, marketplace capitalization is often higher than the realized worth of the network.

This is wherever realized headdress comes in, arsenic it shows the worth of the Bitcoin web based connected progressive coins.

Unlike marketplace cap, which values coins based connected their existent value, realized headdress values each UTXO based connected the terms astatine which it past moved. This attack is simply a overmuch amended proxy for the worth stored successful Bitcoin and tin beryllium utilized arsenic an estimation of the aggregate outgo ground of the network.

Realized headdress drastically reduces dormant and mislaid coins’ interaction connected the network. These coins are seen arsenic having debased economical value, arsenic they were past moved astatine a terms truthful overmuch little than its realized terms that they person small interaction connected it. However, if these coins were moved aft being dormant for years, their interaction connected the realized terms would beryllium correspondingly significant.

The magnitude of alteration successful realized headdress shows the quality successful terms betwixt the terms astatine which a coin was past spent and the terms astatine which it antecedently moved.

Looking astatine Bitcoin’s terms done the realized headdress shows that the 2022 drawdown was the 2nd worse successful its history. In November 2022, Bitcoin saw its realized headdress driblet by 18.8% from the all-time precocious recorded successful November 2021.

Graph showing Bitcoin’s realized terms drawdown from ATH from 2011 to 2023 (Source: Glassnode)

The ongoing carnivore marketplace enactment Bitcoin’s realized headdress astatine $383 billion. This is $56 cardinal little than Bitcoin’s existent marketplace cap, which stands astatine $439 billion.

Graph comparing Bitcoin’s marketplace headdress and realized headdress from 2010 to 2023 (Source: Glassnode)

Comparing Bitcoin’s marketplace headdress to its realized headdress is believed to beryllium a bully indicator of marketplace phases. Namely, erstwhile the marketplace headdress is higher than the realized cap, the marketplace is successful aggregate profit.

Put simply, the realized headdress shows the worth astatine which the coins were bought, portion the marketplace headdress shows the worth astatine which they tin beryllium sold.

Conversely, erstwhile the realized headdress is higher than the marketplace cap, the marketplace is successful aggregate loss, arsenic the worth astatine which astir coins were bought is higher than the worth astatine which they tin beryllium sold.

Data analyzed by CryptoSlate showed that the marketplace is presently successful aggregate profit. And portion that nett isn’t arsenic precocious arsenic the crypto marketplace is utilized to, it indicates a dilatory and dependable betterment from the second-worst terms downturn successful Bitcoin’s history.