June saw Bitcoin suffer its worst monthly performance in 11 years as prices fell 37.9%, while Ether's 45.4% crash was the second worst in its history.
A new report by CoinMarketCap and Glassnode has revealed how challenging the bear market has truly been.
June saw Bitcoin suffer its worst monthly performance in 11 years as prices fell 37.9%, while Ether's 45.4% crash was the second worst in its history.
Analysts say there are parallels with the 2018 bear market, with capital rotating in favor of BTC since December 2021 — and dominance continuing to grow.
A large driving force in Ether's weakness "is the enormous deleveraging that has taken place in the DeFi sector," and the report says:
"Since the DeFi summer started in October 2020, the total value locked in DeFi exploded higher — growing 23.6x over two years, expanding from just $10.7 billion to over $253 billion. However, over the last seven months, a great majority of this TVL has deleveraged and unwound, falling by a remarkable 71.5%, and shedding $181 billion in value."
Stablecoins have been a flight to safety for many crypto investors — and now, the aggregate market cap of the four biggest stablecoins — USDT, USDC, BUSD and DAI — has now overtaken Ether's market cap for the first time in history.
But over this period, Tether's seen its circulating supply decline by $17 billion as large-scale redemptions take place, with USD Coin's supplies surging by $7.3 billion. Analysts believe this could signal that a shift in market preference is underway.
"Two years ago, Tether dominated 88.3% of all stablecoin supplies, and continues to sport the highest trade volume in the industry. However, Tether supply dominance has since been in a persistent macro downtrend, representing just 45.2% of the top four stablecoins supplies today."
An Unusual Bear Market
In dollar terms, Bitcoin's bear market has been colossal — but in percentage terms, the world's biggest cryptocurrencies suffered less of a drawdown than during previous crashes.
Figures in the report reveal that BTC has fallen 74% from all-time highs of $68,000 seen last November, but contrast this with the drawdowns in earlier bear markets: 93% in 2011, 84% in 2015, 84% in 2018, and 75% in 2020.
The CoinMarketCap and Glassnode report notes that previous bear cycles have taken an average of 180 days before a full-scale recovery begins — and this downturn is especially challenging because miners have seen their operational costs rise. With 61,800 BTC on balance sheets, there are fears miners may sell some of their stash to cover fixed costs. Over on Ethereum, miners are soon to be made obsolete as a shift to Proof-of-Stake begins.
"All in all, 2022 has thus far been a major resetting of market expectations, a wide ranging deleveraging, and ideally, the start of a new set of foundations, upon which even taller structures may be built."
