Probably no one wants to recall the terrible Bitcoin bear market of 2022-2023. Compared to the 2018-2019 bear market, this one was just as painful, albeit slightly shorter and not as steep.
Nothing is certain, but the Bitcoin bear market of 2022-2023 may end soon. Why?
Bitcoin Price Chart 2022-2023 | Source: Tradingview
cut in half future near
A Bitcoin halving is an event that reduces the rate at which new Bitcoins are issued and occurs approximately every 4 years. The previous two halvings were catalysts for a stormy bull market. It’s not hard to see why. With demand unchanged, a reduction in supply forces a price adjustment. Supply and demand will always be the law, and when supply decreases, prices increase. The next halving is less than a year away.
no longer “tourists“
When an uptrend due to a halving starts, it always attracts a crowd that follows the momentum of the market. These traders see the price of Bitcoin go up, and they can’t stop getting sucked into it. This causes the bubble to eventually burst and wash it all away within a few months of the peak. We are now past the flush point, as evidenced by the average age of Bitcoin’s unspent outputs (UTXO). Just like that, the tourist disappeared, leaving only the HODLer.
billionBad printing return failed to make a new low
Last year, there was a lot of bad news that flooded the cryptocurrency world, adversely affecting the price of Bitcoin. Terra, Three Arrows Capital, Celsius Network, BlockFi, Voyager Digital, FTX and many more defunct platforms. But this year, the bankruptcy of Genesis and concerns about DCG, Grayscale and Binance did not send Bitcoin to new lows. The seller was eventually swept out.
There will come a day when Bitcoin’s growth will exceed the 4-year price cycle. Until then, history will repeat itself. During the bitcoin bear market of 2014-2015, the price fell to around $350, before eventually hitting $200 where it remained for several months. During the Bitcoin bear market of 2018-2019, the price dropped to around $6,000, eventually hitting $3,200 and staying there for several months. During the 2022-2023 bear market, the price will fall by about $28,000, eventually hitting $16,000 and staying there for several months. In each case, prices followed the same pattern of highs, a multi-month series of lower highs, and an eventual capitulation of more than 40% that lasted for several months, consistent with past trends.
What would we have if Bitcoin’s 4-year cycle happened again?
We may never see $16,000 worth of Bitcoin again. Prices never returned to their lows after capitulating two periods ago. Last cycle, it was almost back to the bottom, but that was due to the severe market reckoning caused by the COVID-19 pandemic. The next Bitcoin halving is less than a year away. There have been no major liquidation events, so Bitcoin may have bottomed out.
bitcoin immune to forest Regulation
Bitcoin has proven to be relatively immune to regulatory pressure. It has been clear for years that the king of cryptocurrencies is a commodity, not a security. Even Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), admitted that only one cryptocurrency is clearly a commodity (meaning not a security). Gary Gensler points out that this is Bitcoin. Whether led by Gary Gensler or not, the SEC will likely continue to take actions that imply that most digital assets are securities. Fortunately, Bitcoin does not take these risks.
Financial Advisors and Allocators rare for bitcoin
Financial advisors and their clients have very little allocation to Bitcoin. In previous cycles, they had legitimate excuses for this, such as a lack of a legitimate product and significant legal exposure. For the broader digital asset market, these issues largely remain. But for Bitcoin, most of that has already settled. Therefore, financial advisors are expected to accept more Bitcoin into the upcoming bull market.
- FTX Postpones Sale, Confirms Plans to Restart Japanese Exchange
- PlanB recommends buying Bitcoin 6 months before the halving and selling it 18 months later for a profit
- Here’s Why Billionaire Ray Dalio Holds Some Bitcoin Even If He’s Not a Fan
According to Coindesk