The Cryptocurrency Bear Market has reached almost a year and has been very similar to previous cycles. In this sense, we can see that we have just reached the time length of the other bearish cycles, is it time for the market to come back?
the bear market
Bear markets always seem to drag. However, the strong downward trend only lasted one year. Furthermore, the cryptocurrency industry reached an all-time high of just over R$15.6 trillion in market cap in November 2021. Almost a year later, on November 22, they hit a cycle low of R$4.2 trillion, down 73%. Arcane Research noted in their recent “Ahead of the Curve” report that this bear cycle now coincides in duration with 2014 and 2018. The BTC bear market continues while the bear markets of 2014-15 and 2018.” However, in the previous cycle, the markets dropped 87%, from BRL 4.32 trillion in January 2018 to more than USD 530 billion in December. The magnitude of the most recent declines were not that great despite the collapse of Terra/Luna and FTX. What follows a down cycle is a long period of consolidation and slow accumulation, which we can see now. The report noted that the current Bitcoin market (not the total cryptocurrency cap) traversed over a period of 376 days from top to bottom. In 2018, this period was 364 days and in 2014 it was 407 days. “So while the current downgrade duration has comparable durations to previous cycles, the depths are greater right now.” The market was up about 10% from the bottom of the current bear market last week. Approximately $80 billion brings the total capitalization to over $900 billion.
Investor opinion
Most investors believe that we are going to have a few more casualties and after that, we will still have a great horizontal movement, both in this cycle and in the next cycles, as stated by Enzo Cobbuci, crypto investor and influencer who says: “In my opinion the cycles will have great horizontal trends, both high and low, we can expect longer and more horizontal cycles over time.”
Good Fed for Cryptocurrencies?
Other factors can also indicate market bottoms and trend changes. Thus, the shift by the US Federal Reserve towards less aggressive stimulus measures could mean decreasing interest rate increases next year. That would be good news for risk assets such as tech stocks and cryptocurrencies, which have suffered this year. From the same point of view, Enzo states “Cryptocurrencies can still fall because of the FED, Even with lower interest rates, we can still seek a bottom in Bitcoin, because every time the FED pivots, that is, it cuts rates interest rates, the market tends to fall.” In addition, Enzo takes the opportunity to make a comparison, “Comparing historical moments where the macroeconomic scenario was similar, for example, in the 70s, where the true bottom of the market reached, when the FED pivoted and began to cut rates aggressively.” After all leverage has been removed from the crypto market, only the cold-blooded remain, those who are completely convinced that the market will come back. Ultimately, Bitcoin reclaimed $17,000 this week and Ethereum breached $1,300 again, so a longer-term trend change could be starting to take shape. However, a bull market is unlikely to occur until later this year.
