Market Overview
2022 is a year full of historical challenges. Stocks, debt and digital assets are all struggling under ever-tightening monetary conditions. Inflation and tightening liquidity in the macro economy have put extreme pressure on the over-leveraged cryptocurrency ecosystem. And the biggest pressure of the recent past has come primarily from highly leveraged funding and the rehypothecation of on-chain and off-chain collateral as it expires. In this scenario, the prices of both BTC and ETH have fallen below their all-time highs of the last cycle. Subsequently, a large portion of the market is mired in unrealized losses and all investors in the period 2021–2022 are now underwater. With the financial pain that comes with it, more and more investors are liquidating their positions and realistic losses have reached record levels.
Bitcoin Retracement and Persistence
Assess the current price decline and duration of Bitcoin. Looking at the historical data, the bear market lows were established with the retracement of BTC from its all-time high of -75% to -84%. And the current drop of -73.3% is below the all-time previous high of November 2021, with a duration of between 227 and 435 days, indicating that this current bear market is well within historical norms and size.
Using a variety of statistics, we can be sure that the Bitcoin bear market of 2021–22 is one of the most devastating bear markets in history, both in terms of severity, depth, capital outflows and the scale of investor losses.
Ethereum’s Price Pullback
The price of ETH has also been affected by the pullback to a mid-cycle high of below $1,400 in 2018. As with Bitcoin, all investors who purchased Ethereum in 2021–2022 are now holding unrealized losses. Much of this decline has been driven by the massive deleveraging of the DeFi ecosystem.
Since Bitcoin’s dominance controls the direction of capital flows, this bodes well for Ethereum to continue to underperform in the coming months if we refer to history. At the same time, capital efficiency is deteriorating as evidenced by the value of Ethereum captured per byte, so there is a possibility that the price of ETH will drop a further 50%.
Some Conclusions
2022 is going to be a tough year for digital assets. This particular bear market has hit Bitcoin and Ethereum very hard. Many on-chain and market performance metrics have reached historically and statistically significant lows. Various studies have highlighted the magnitude of investor losses, the scale of capital destruction, and the observable capitulation sell-offs that have occurred over the past few months. Given the extensive duration and size of the current bear market, it is reasonable to assume that 2022 is the most destructive bear market in the history of digital assets.
TITAN Delivery
Recent major technical updates are as follows:
1. Optimize token search logic to ensure token addresses are verified by checksum.
2. Fix serviceworker request path, always request app-shell from the same path as the cache key, to ensure the cache is valid, etags will match the corresponding cache.
3. Fix weth trading on price prediction value inaccuracy, added Cypress test to check weth transactions on price is not affected.
4. Added error messages for unsupported V2 pools (Polygon, Optimism, Arbitrum).
