Prominent crypto analyst and founder of Into The Cryptoverse Benjamin Coven shared an interesting Bitcoin chart that might help investors determine a point where the price of the first cryptocurrency will finally reverse and the bear market will be no more.
How does metric work?
The Bear Market Cycle Peak ROI is a useful indicator that can be used to determine capitulation points of the current cycle. By measuring the Return of Investments from the peak of the current cycle, analysts determine the depth of losses the market is currently facing.
With the profitability of the cryptocurrency market dropping to new lows, retail and institutional investors tend to abandon their purchasing operations and gradually decrease their exposure to digital assets.
Not worst case
In comparison to previous bear markets, Bitcoin's ROI drawdown from the ATH has not been nearly as drastic as it may seem. At this time, Bitcoin has not yet reached the ROI of previous cycles. However, a drop to the 0.3 ROI ratio shows that the market has already experienced deep losses and will now most likely move toward the acceleration stage.
Unfortunately, a further decline is more than possible as the realized loss on the market has not yet reached the values we saw on the bear market in 2018. Bitcoin, Ethereum and other assets might still test new local lows, especially if the Fed does not realize their narrative.
On-chain and market indicators unfortunately do not show any signs of an immediate recovery. Trading volume, open interest and other metrics are moving toward their pre-FTX crash values but are not creating the conditions for a proper recovery rally — at least not yet.