3 Charts Showing This Bitcoin Price Drop Is Different From Summer 2021

Bitcoin (BTC) bear markets come in many shapes and sizes, but this one has caused a lot of panic.

BTC was described as a “bear of historic proportions” in 2022, but just a year ago a similar sense of doom engulfed crypto markets as Bitcoin saw a 50% drop in weeks.

In addition to price, however, the data in the chain will look very different in 2022. CoinTelegraph takes a look at three key metrics that show how this Bitcoin bear market is not like the last one.

hash rate

Everyone remembers the exodus of Bitcoin miners from China, which effectively banned the practice in one of the most productive areas.

While the magnitude of the ban has since come under suspicion, at the time the move generated massive numbers of network participants — mostly to the United States — in a matter of weeks.

As a result, Bitcoin’s network hash rate – the computing power spent on mining – has been cut in half. At the time, this was unprecedented, while miners felt they had no choice but to at least temporarily stop their operations.

This time it’s not red tape, but simple math that threatens miners. BTC’s drop in price to its 19-month low has put increasing pressure on the profitability of mining operations.

However, as Cointelegraph reported, a massive capitulation isn’t necessarily going to happen, even at current levels, amid suggestions that miners who were supposed to sell BTC stock have already done so.

The hash rate supports that claim, which data source MiningPoolStats estimates has fallen by a maximum of about 20% from all-time highs before returning.

Active addresses

The July 2021 decline was accompanied by a slowdown in Bitcoin network activity.

Active addresses, as measured by on-chain analytics platform CryptoQuant, saw a noticeable drop through June last year before rebounding back in line with price in the third quarter.

This time, no such dip has occurred, indicating that the market is more concerned with moving their BTC. This has a number of implications – hodlers may have become sellers because of low prices; traders may be trying to take advantage of volatility; others may want to “buy the dip.”

It’s worth noting, however, that overall on-chain volume remains low, meaning buy-side support is likely not enough to end the downward price trend, analysts say.

Exchange reserves

Finally, and despite the generally lower volumes mentioned above, Bitcoin exchanges are losing coins around $20,000 – and fast.

Related: These 3 Stats Suggest Bitcoin’s Price Crash Isn’t Over Yet

Normally, price drops trigger an influx into exchanges as panicked traders prepare to sell or go short. This time it seems to be really different in that regard as exchange users are removing coins from accounts and not loading.

21 major exchanges tracked by CryptoQuant currently have balances of 2.419 million BTC, up from 2.544 million at the start of the second quarter.

Foreign exchange reserves rose during the downtrend in the second quarter last year and only resumed their own decline when BTC/USD recovered.

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