Here’s how Bitcoin’s current rally stacks up against previous ones in terms of the drawdowns it’s experienced so far.
The Current Bitcoin Rally Has Seen A Peak Drawdown Of -18.6% So Far
In a recent tweet, the on-chain analytics firm Glassnode compare Bitcoin’s latest rally to those seen throughout cryptocurrency history.
Typically, rallies are compared using metrics such as the percentage price increase recorded during it or the length of time it lasted (which can be measured in terms of blocks created, such as those created in the view in cycles in terms of emergences). Here, however, Glassnode takes a different approach that provides a new perspective on these rallies.
The basis of comparison between price increases here is the drawdowns experienced by each of them during their periods. Note that these drawdowns should not be confused with cyclical drawdowns which are used to measure how the price has declined since the bull run to the top.
The drawdowns in question are the obstacles that the cryptocurrency encountered while the rallies were still going on, and so, the coins were finally able to overcome.
Here’s a chart showing the level of drawdowns experienced in each of the historical bull markets, and where the current rally stands in comparison to them:
Looks like the value of the metric hasn't been too high for the latest rally so far | Source: Glassnode on Twitter
The five bull rallies here are as follows: genesis to 2011 (the very first rally), 2011-2013, 2015-2017, 2018-2021 (the last rally), and 2022 cycle+ (the ongoing one).
The analytics firm here captures the bottom of each bear market as the start of subsequent bull rallies. This means that parts of the cycle that some might not consider part of a proper bull run are also included.
A prime example of this is the April 2019 rally, which is often considered its own thing but clubbed with the last Bitcoin bull market in the chart above.
From the graph, it can be seen that the deepest drawdown that occurred during the first bull market was measured around -49.4%. The next run, the 2011 to 2013 bull, experienced a bigger hurdle with a -71.2% plunge in its middle.
The next one (2015-2017) then only saw a drawdown of -36%, but the drawdown increased again to -62.6% for the run following it (that is, the most recent bull market) .
So far in the 2022+ Bitcoin bull market (which can only be considered a bull market at all if the November 2022 low is the true cyclical bottom), the deepest drawdown observed so far is the March 2023 plunge at -18.6 %.
Clearly, the drawdown seen in the current rally is far less than what bull markets have faced historically. If the pattern of past runs holds any weight, then this means that the current bull market should have a lot of potential to grow.
BTC Price
At the time of writing, Bitcoin is trading at around $26,900, down 2% from last week.
BTC has been moving sideways recently | Source: BTCUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, Glassnode.com
