Some crypto investors fear the bear crypto market (a sustained period when the equity markets are down at least 20% from their recent peaks) because they think it never goes to an end and Bitcoin prices will remain at this level. But the truth is Bitcoin has a long history of bear markets. On the other hand, this bear market is different from the several major drops in its history. What awaits us soon
The first crypto bear market started on January 11, 2012, and it finished on July 11, 2012. In 2012 crypto enthusiasts faced a series of hacks and other negative events that led to the uncertainty around Bitcoin. Bitcoin's price went down up to US$4.22 on July 11th and it was awful.
The next bear market was caused by a series of lawsuits and lasted from August 7, 2012, to December 6th, 2012. This period was marked by a lack of faith in the crypto market. As you have already guessed Bitcoin has not died despite the price dropping to $8.4.
The crypto winter started on November 29, 2013. It lasted 415 days and finished on Jan 7th, 2015. It looked like the current situation. While the price of Bitcoin began dropping headlines were optimistic and experts predicted that it could hit $98,500. Then headlines became negative at the beginning of 2015. Experts predicted Bitcoin’s death and the big problem for the crypto market. As we know, it didn’t happen.
After the 2017 boom Bitcoin crashed again. On 17 December 2017 Bitcoin's price hit a new all-time high of $19,783 but on 22 December 2017 Bitcoin dropped to below $11,000. The price of bitcoin fell to $5,500 on 15 November 2018.
On 16 March 2020, the Bitcoin price dropped again to $5,000 due to the COVID-19 pandemic. But it was the exception and black swan event.
Experts still haven’t learned the art of Bitcoin’s price prediction. But they have known that specific events and narratives, as well as through news outlets and social media channels, influence the crypto market. The key driver of bear crypto markets was the lack of faith in Bitcoin. Now we can notice that the 2022 bitcoin bear market is different from the past.
Experts predict that the new crypto winter has started. The crypto market spiked to around $3 trillion in total assets in November 2021, then it dropped to less than $1 trillion in June 2022. Now the key driver of the crypto crash is crypto loans. The leveraged speculation led to the rise of crypto prices in 2021. But in 2022 money will move out of deployed crypto financial systems due to over-leverage and poor risk-taking. The interest rates rising and the Ukrainian-Russian war also affect crypto prices. Crypto collateral that supported loans one day became deeply discounted.
In short words, mass adoption means people have treated Bitcoin and crypto in the same way as the rest of the assets such as stocks and bonds. That makes crypto prices more correlated to traditional markets and financial systems. But there is nothing new. This crypto winter looks like the 2007-2008 financial crisis.
Anyway, crypto market capitalization is about $1 trillion which is good. Regulations and crypto maturity will have a positive impact on crypto prices in near future. We all should just survive this general macroeconomic downturn. It seems Bitcoin never dies and even pessimistic experts are optimistic. Many experts recommend understanding the risks of crypto investing and not following headlines.
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