SwanBitcoin445X250

The Bitcoin[1] market has now traded lower for eight consecutive weeks, the longest continuous string of red weekly candles in history. Even, Ethereum[2], the largest altcoin painted the same picture. Well, such bearish movements directly or indirectly affect the returns/profit margins.

To make things worse, derivative markets suggested fear of further downside at least for the next three to six months.

Diminishing returns 

Price-performance over the last 12 months has been nothing short of lacklustre for both Bitcoin and Ethereum. Indeed, this put a dent in long-term CAGR[3] rates for Bitcoin and Ethereum. Glassnode’s weekly report published[4] on 23 May highlighted this scenario.

Considering the largest cryptocurrency, BTC traded within an approximately 4yr bull/bear cycle, often associated with the halving events. Looking at the long-term compression of returns, CAGR declined from 200%+ in 2015, to less than 50% as of this writing.

Source: Glassnode

The report added,

“In particular, we can see the marked decline in 4y-CAGR following the May 2021 sell-off, which we have argued [5]was likely the genesis point of the prevailing bear market trend.”

In addition, Bitcoin gave a negative 30% return over the short term meaning it corrected by 1% on average on a daily basis. This negative return is quite similar to the previous bear market cycles for Bitcoin.

Source: Glassnode

Moving on to ETH, the altcoin recorded relatively poorer performance compared to BTC. The monthly return profile showed Ethereum recorded a grieving picture of -34.9%. In the longer run, Ethereum also seems to be experiencing diminishing returns over time.

Furthermore, over the last 12-months, the 4yr CAGR for both assets declined from 100%/yr to just 36%/yr for BTC. Also,  28%/yr for ETH, highlighting the severity of this bear.

Source: Glassnode

Read more from our friends at AMB Crypto