2022 realized cap drawdown was second worst in Bitcoin’s history

Feb. 12, 2023 at 5:13 pm

By Andjela Radmilac and James Van Straten

The 2022 bear market brought about the second most destructive ATH drawdown of the realized cap. Here's what it means for Bitcoin.

Analyzing Bitcoin’s market cap shows that the 2022 bear market brought the fourth worse drawdown from the all-time high in its history. Bitcoin’s drop to $15,500 represents a 76.92% drawdown from its ATH.

Market capitalization is one of the most widely used metrics when estimating the size and value of an asset. Defined as the combined value of all units of an asset, market capitalization is calculated by multiplying the price by the circulating supply.

When it comes to Bitcoin, market capitalization and its fluctuation is often used to determine the strength and adoption of the network. It’s also especially useful when comparing Bitcoin to other assets and markets.

The most significant price drawdown from ATH happened at the end of 2011 when an aggressive bear market wiped out 91.78% of Bitcoin’s market cap. Crypto winters in 2015 and 2018/2019 saw drawdowns of 82.75% and 82.63%, respectively.

This is in line with CryptoSlate’s previous analysis, which found that each market cycle posted higher lows.

However, market capitalization fails to represent the actual state of the network. Due to a large number of lost and inactive coins, market capitalization is often higher than the realized value of the network.

This is where realized cap comes in, as it shows the value of the Bitcoin network based on active coins.

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