abdullah video m2 (18) bear crypto market when will it end top 3 theories

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In this video, we are going to talk about the bear crypto market when will it end top 3 theories

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Bear markets refer to a period of time where supply is greater than demand, confidence is low and prices are falling. It is a widely used term not only in the cryptocurrency market but in traditional markets such as stocks, real estate, commodities and bond markets. Pessimistic investors who believe prices will continue to drop are referred to as bears.

When compared to traditional markets, cryptocurrency markets are smaller and more volatile. As a result, it is common to see prolonged and more volatile bear markets, where 85% price drops are not out of the ordinary. In addition to significant price drops, other characteristics of crypto bear markets include:

Extreme Fear and Pessimism

Pessimism and fear reign in crypto bear markets. These sentiments last longer and are more prominent during these times. A useful metric that measures market sentiment is the Crypto Fear and Greed Index with scores that range from single numbers up to 100. Lower scores represent greater fear. Scores below 49 are on the more fearful side, and scores that range between 50 to 100 tend to be more on the optimistic side.

Low Trading Volume

Lower trading volume is often a result of extreme fear and pessimism in the crypto bear markets. During prolonged periods of low trading volume, price action appears more like a flat line with few minor changes, signifying a crypto winter period. 

Unfavorable Macroeconomic Conditions

Since the availability of money affects trading volume and because economic stability affects investor confidence, unfavorable macroeconomic conditions can often lead to a bear market in crypto markets. Traditionally, crypto bear markets accompany the combination of rising inflation and rising interest rates. Long periods of these unfavorable macroeconomic conditions can turn crypto bear markets into crypto winters

Bear-market blues have set in among even the most bullish crypto proponents. Experts are pointing to the war in Ukraine, concerns over tighter monetary policy and rising inflation rates as the primary driver for slumping prices for risk-on assets such as cryptocurrency. Interestingly, the crypto market has been increasingly following the stock market lately, which makes it even more intertwined with macroeconomic factors. 

In addition to an already bleak macroeconomic backdrop, fear in the cryptocurrency space has recently been magnified by the collapse of the Terra ecosystem and crypto lender Celsius pausing account withdrawals and transfers, both of which evaporated investor confidence and caused the market to tank. 

The Bear Markets of the Past

If you are a crypto investor, you might feel like the current bear market is never going to end; however, history highlights that this is unlikely to be the case. Bitcoin has been declared dead hundreds of times over the course of its tenure. To gain a little perspective, it’s worth analyzing the various bear markets since Bitcoin’s inception through 2022, highlighting the catalysts that drove prices and overall sentiment into a nosedive.

2012 Bitcoin Bear Market 

The first major bear market of Bitcoin was in 2012, a year that was marked by an onslaught of hacks and negative events that contributed to the uncertainty around Bitcoin. This bear market lasted 185 days, with a peak price of $7.08 and a bear market low of $4.22.

2014 Crypto Bear Market 

Subsequently, 2013 was an extremely significant year for Bitcoin and crypto in general. In October 2013, Silk Road, an online black market, was shut down by the FBI. However, Silk Road’s significance in the history of Bitcoin was that it represented the crypto asset’s first form of widespread user adoption. This bear market lasted 415 days, with a peak price of $1,149.19 and a bear market low of $197.24. 

2018 Crypto Bear Market 

The 2018 cryptocurrency bear market followed what many refer to as the bursting of the cryptocurrency bubble. After an unprecedented boom in 2017, the price of Bitcoin fell by over 65% from January 6 to February 6. The cryptocurrency market entered a long winter, picking ba

ck up in early 2019. 

Timing the bottom of a Bitcoin bear market is difficult because of many factors that have the potential to impact overall sentiment in the cryptocurrency space. However, you can use a few strategies to predict a potential range where a bottom may occur.

Monthly Bitcoin Heikin-Ashi Candles

A solid strategy to sniff out a trend reversal is by using Heikin-Ashi candlesticks on Bitcoin’s monthly chart. As the saying goes, “zoom out, when in doubt”; the monthly chart provides the best perspective for identifying a meaningful Bitcoin bottom and reversal. Monthly candlesticks can help eliminate the noise and allow you to visualize the multi-year trend of Bitcoin on a larger time frame.

Secondly, Heikin-Ashi candles are useful as they smooth out price action and allow trends to be more easily identified. As opposed to typical candles, Heikin-Ashi candles are calculated based on the weighted average price of previous candles. These candlesticks are a delayed indicator, meaning that if a trend change has occurred, you would have already missed the bottom. This delay isn’t necessarily a bad thing because while you may enter the market at a slight premium, you can have greater certainty that the bear market has entered an accumulation phase as opposed to a continued downtrend. 

In previous bear markets, the downtrend on the monthly Heikin-Ashi timeframe has ranged from 13 to 15 months. Currently, Bitcoin has experienced seven months in a downtrend already as seen below: 

The chart above also uses a logarithmic scale, which captures the general trend of Bitcoin in a more effective manner than a normal scale. Based on the data from previous bear markets, it is plausible that the Bitcoin bear market bottom could arrive between September 2022 and March 2023. However, it is important to note that past results are not indicative of future performance. 

Bitcoin Halving Analysis

Most investors believe the value of Bitcoin will increase and may achieve greater growth between now and its fourth halving in 2024. Bitcoin halvings occur roughly every four years. To be more precise, for every 210,000 blocks created, the number of Bitcoins created in each block algorithmically decreases by 50%. This belief is based on Bitcon’s track record with previous years

The chart above also uses a logarithmic scale, which captures the general trend of Bitcoin in a more effective manner than a normal scale. Based on the data from previous bear markets, it is plausible that the Bitcoin bear market bottom could arrive between September 2022 and March 2023. However, it is important to note that past results are not indicative of future performance. 

Bitcoin Halving Analysis

Most investors believe the value of Bitcoin will increase and may achieve greater growth between now and its fourth halving in 2024. Bitcoin halvings occur roughly every four years. To be more precise, for every 210,000 blocks created, the number of Bitcoins created in each block algorithmically decreases by 50%. This belief is based on Bitcon’s track record with previous years

Stay solvent

Most people who invested in crypto in late 2020 saw their portfolios at all-time highs in April or November 2021. But the fireworks are behind us.

“Don’t trade or invest with the mindset of ‘making back’ what you lost in the bull; it’s an inherently flawed comparison,” Cred said.

Although it may be tempting to try and “make it back in one trade” by entering highly risky trades, revenge trading can also easily backfire. Alex Svanevik, CEO of data analytics firm Nansen, said staying solvent is key in a bear market, and it helps if one didn’t “touch leverage.”

Leverage is a common tool in crypto markets, but resorting to leverage to buy coins in a falling market “has a much higher chance of ruin and will erode your mental capital,” Cred warned. “Even if you manage to get a good entry, the chances that you have the mental fortitude to hold a large position like that are significantly reduced.”Crypto is a place for innovation and experimentation. Many projects pop up, die, reinvent themselves, succeed or vanish from memory. Crypto projects often have tokens associated with them, and the tokens are often (but not necessarily) tied to the success of the projects, especially during the early days.

Reynolds said what worked for him during the last bear market was to keep investigating both new and old projects. “You will need to keep re-investigating as projects pivot from their original idea and find a much better product-market fit, like Aave,” he said. “I look for a core new mechanism that creates a better user experience and bet on multiple projects utilizing it.”

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