After the crash that rocked the market last week, Bitcoin is now officially entering another bear market. After falling more than 70% from all-time highs, investors across the space have started pulling out of the digital asset due to this new price trend. However, trends like this are not new to Bitcoin. There have been some brutal bear markets in the past, although the current market may look worse than the previous one as it is still in progress.
It is often helpful to look at Bitcoin’s previous market cycles to see that there is nothing unusual about this. Yes, the bull and bear trends in this market have strayed from the historical record, but it is still very similar to what has been recorded in the past.
For Bitcoin, alternating between bear and bull markets has always been part of the experience. In its 13 years of existence, it has gone through several such boom-bust cycles and isn’t expected to change anytime soon.
Related reading | Liquidations exceed $250 million as Bitcoin recovers above $20,000
So far, Bitcoin has fallen about 73% from its most recent cycle peak, but this isn’t the first time this has happened. Looking back at the market in November 2013, Bitcoin actually continued to decline until it finally ended its 407-day decline and bottomed at 85% of its all-time high. This marks the end of that long bull market.
For market participants, the bull-bear cycle of 2017 is fresher on their minds than it was in 2013. However, as in 2013, the pullback was just as brutal, albeit of a shorter duration. A situation that lasted about a year ended with an underperforming bottom of 84%.
BTC bear markets are always brutal | Source: Arcane Research
The pullback is expected to continue as the digital asset continues to closely follow this trend. From the previous two examples, we can easily conclude that the historical movement will see Bitcoin bottom in the mid-80s. As such, a bottom is likely not to come, and the market could see BTC reach $11,000 before the expected market bottom in late 2022.
Will Bitcoin follow?
While looking at previous movements can help point to the direction Bitcoin price may ultimately head, there is always new information and events that have a major impact on it. On the one hand, the macroeconomic environment plays an important role in the recent trend of digital assets. Bitcoin has been directly impacted by concerns about inflation, Fed rate hikes, and dwindling liquidity.
BTC enters bear market | Source: BTCUSD on TradingView.com
This has led to a more intertwined market when it comes to Bitcoin and broader financial markets. As the cryptocurrency space has expanded, it has been more impacted by Federal Reserve decisions, stock market performance, U.S. elections, and ever-increasing cryptocurrency regulations.
Related reading | Cardano Vasil Hard Fork Release Date Set, Time to Buy the News?
Still, Bitcoin’s long-term move is the best bet. With sentiment running high, Bitcoin veterans are accumulating and hibernating while waiting for winter to pass. If history is any guide, Bitcoin could be as high as $200,000 by the time of the next bull run.
Featured image from Forbes, charts from Arcane Research and TradingView.com
follow Best Owie on Twitter Get market insights, updates and the occasional interesting tweet…