The Anatomy of Crypto Bear Markets and Why It Doesn't Last Forever
Apart from the tides of the sea, perhaps the next most erratic thing on the surface of the earth right now is the crypto market. For those who are familiar with cryptos, this is not surprising considering that the crypto market is still purely driven by speculations.
While the market could become more stable in the next couple of years ahead, for now one has to learn how to ride with the uncertainties plaguing this infancy stage.
And the uncertainties become far more scarier in a bear market than one could ever imagine in a bull market. A typical crypto bear market inflicts pain and losses that stagger even the most devoted crypto advocate.
Since I do not intend to write a book on bear markets, this essay will briskly xray some of the best known causes of crypto bear markets and why it doesn't last forever.
What is a crypto bear market?
Simply put, a crypto bear market is said to be occurring (or to have occurred) when crypto assets are generally and persistently losing their value (at least 30%) over a period of time.
If the definition above is correct, then it follows that the crypto market is presently in a bear market. While a few crypto assets such as Bitcoin and BNB are struggling to get out of the grip of the bear market, most others coins are hopelessly trapped between the fang of the bear market.
Why Do Bear Markets Occur?
There is no simple answer to the question above. But if one is forced to answer the question above at gunpoint, the perfect answer could be - because the bull market has overstayed or expired.
More seriously, a bear market only replaces a bull market. The death of one bull market births another bear market and vice versa. The present bear market dates back to December 2017 when most cryptos reached their all-time high.
And since it was not possible for prices of cryptos to continue moon forever, the bears unleashed their wrath upon crypto assets.
Another way to answer the question of why bear market occurs would be - because investors are massively cashing out or taking profits.
Yes. It is ethical and sane for investors to take profits when their ROI hits the roof. Unfortunately, a collective instinct to take profit, which we saw in the wake of 2018, would plunge the crypto market into one of the most unforgiving bear markets in the history of the industry.
Why Bear Markets Don't Last Forever
As threatening as the bear market may seem, it will not last forever. This is because greed is an inherent part of the human nature.
Usually, a large number of the investors who made great fortunes from the last bull market will return to buy cheap, hoping that they could sell high.
Not only that, those who missed out of the last bull run sees the bear market as a perfect opportunity to accumulate cryptos and then sell when prices appreciate again.
The actions above have historically proven to have positive impacts on the market. At the peak of the euphoria, FOMO comes into the picture and then a trend reversal which heralds a bull run begins.
If there is one lesson that the anatomy of the bear market has taught us, it is that bear markets don't last forever - for the same reason bull markets don't last forever.
I am @gandhibaba, the young man who goes about carrying his magical pen, not his gun, in his pockets.
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Solid read @gandhibaba
Upvoted and resteemed already
Thanks.
Interesting read @gandhibaba
It's hard not to agree 'that the crypto market is still purely driven by speculations'. It's a high risk game for those who decide to invest in current state of this market.
I found it so confusing. Since beginning of this year, BTC went up way over 100%. So saying that we're in bear market doesn't seem to be right since price have been climbing up steadily most of the time (except of recent huge panic sell).
ps. It's an interesting post. Keep in mind to share next publications you consider valuable on our "project hope" telegram channel (extra traffic + I'm managing almost 200k SP already, so you can receive solid upvote).
Upvoted already,
Cheers, Piotr
Well, it could be a bit confusing to decide whether or not we are in a bear or bull market since BTC rose over 400% this year alone. However, BTC is still over 50% down from its all time high while most other coins are 95% or more down from their highs. So, we are still in a bear market - although a bull run is gradually building up. Cheers!
PS: I have shared this post with #Projecthope. Thanks for the upvotes. Cheers!
Thank you for this. I'm not particularly good at playing the markets, so I'll stick to hodling LOL
Hahaha I am just like you too. So I will hodl too
Greetings @gandhibaba, I loved your post, and I also remember a little economic engineering classes I saw a few semesters ago.
As you say not everything is forever and at least now that is in decline, we will be able to take advantage of some coins that although now we do not see the benefit, in a future rise if, something like an investment in the medium / long term.
Hopefully if God wants the next time that the bull market returns, lasts a good time, but not so long as to leave us a long shadow then in the bassist hahaha.
Thank you for reading my comment, I'm not leaving without wishing you a good day, evening or night.✌️
Hi @gandhibaba, great article.
According to what you explain, I must be patient then because the bear market will pass and again we will see a recovery in prices.
We need to see this friend.
@fucho80
The bull run is long overdue and I look forward to seeing one soon. Cheers!
Has there been another bear market of this nature?
pd: it's a very fresh read, thank you.
I believe that many still don't even see crypto as a market. Would be nice to get some mainstream media coverage about all the blockchain development.