Following the recent market crash last week, Bitcoin now is officially in a bear market. This new trend in price has caused investors to abandon bitcoin, which had fallen more than 70% since its peak. These aren’t new trends for bitcoin. The current market might seem more difficult than others because it is ongoing. But, in the past there were some very brutal bear markets.
A blast from The Past
Sometimes it is helpful to look back at previous bitcoin market cycles to confirm that these are not unusual. Although the market’s bull and bear tendencies have changed from the historical record, it is still very consistent with the history.
Bitcoin has experienced both bull and bear markets. Bitcoin has seen many of these boom-bust cycles over its 13 year existence. This trend will not change any time soon.
Over $250 Million In Liquidations As Bitcoin Recovers Above $20,000| Over $250 Million In Liquidations As Bitcoin Recovers Above $20,000
Bitcoin is currently down 73% since its last cycle peak, but this isn’t the first time such a thing has happened. It is clear that bitcoin lost 407 days before it reached a low of 85%. That marked the end to the bull market.
The 2017 bull-bear season is more fresh than 2013. Although the drawdown was shorter than in 2013, it was still as devastating. The drawdown that had been going on for about a year was over with a performance drop of 84%.
Source: Arcane Research| Source: Arcane Research
It is probable that bitcoin will continue to draw down as long as it maintains its current trend. These two previous examples can be used to draw the conclusion that bitcoin will reach its historic bottom in the middle of the ’80s. Therefore, it is highly unlikely that the market will reach its bottom and Bitcoin could see $11,000 at the top before 2022.
Bitcoin is the next step
Even though past bitcoin price movements are helpful in predicting where it might go, the market is constantly changing and new information can greatly impact its direction. The macroeconomic environment has played a major role in bitcoin’s recent movements. Bitcoin was directly affected by fears about inflation and Fed rate rises.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
It has resulted in a stronger market that is interconnected with the financial and bitcoin markets. The Fed’s decisions and stock market performance have greater impact on cryptocurrency than ever before.
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However, bitcoin’s long-term potential remains the most attractive. Bitcoin veterans who are emotionally high take to hibernating, accumulating bitcoin and waiting for winter to end. The next bull market could see bitcoin prices reaching $200,000. History is a good example.
Featured image taken from Forbes.
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