The current bear market made us all lose a lot of money and of course that is a bad thing, but I think for the long term health of Bitcoin it is extremely good and it will benefit us all in the long run as long as we don’t panic and make the right choices. Let’s forget all the pain for a moment and take a look at the bright side of bear market.

The crash was very painful, especially for the ones that bought around the recent all time high or were all in in crypto, but let’s take a moment to focus on the positive side of it.

The bear market will bring some positive things too

Bad projects are exposed or weeded out

The crypto world is not different from the real world, a crisis is painful but very needed now and then to cleanse the market and punish everyone who misallocated funds and effort in bad projects and stop them from wasting. Sadly enough, the government and the FED disrupted this natural mechanism in 2008 by bailing out the banks and print a lot of money to give a (false) boost to the economy. In Bitcoin there happily is no government or FED so this mechanism works perfectly.

In a bull market every coin can do well no matter how bad the project is until the tide changes. When the negative sentiment hit the market dumb money will be pulled out in panic and the projects where the most dumb money was invested in will tank most. Since these projects are also most fragile the price crash can destroy the entire business model and cause the project to fail.

Bitconnect, an obvious scam didn’t even survive the first months of the bear market and all the investors who misallocated their money in the project were punished by the market and lost everything. Promoters of Bitconnect lost their reputation forever and disappeared. This was a much needed cleansing of the market because all the funds and effort invested in this scam didn’t produce anything useful for humanity, thus was wasted every day of existence.

Also other bad projects that promise much more than they deliver like Ripple, Bcash and Cardano tanked much harder than Bitcoin thus a lot of misallocated capital was destroyed and misplaced hype about being a better Bitcoin totally died out. These projects will probably keep bleeding as long as the bear market rages on, only a positive switch in sentiment and new hype can save them.

This bear market has shown the strength of Bitcoin and exposed the weaknesses of many alt coins. In bad times good investments become visible.

Real innovation takes off

In a bull market there is a lot of ‘noise’ for developers. They are too busy scaling up exchanges because they can’t handle the enormous amount of new sign ups every day and they are solving problems all day because the network is reaching it’s limits and this leads to problems. Furthermore, a lot of talent is misallocated to bad projects that raised a lot of money through hype in an ICO.

Now the bear market is in for a while developers are building great innovative tech on top of Bitcoin again because the noise is gone and the funds of bad projects are vaporised for the biggest part. The recent bear market came clearly in parallel with the most bullish technological development on Bitcoin ever like the main net launch of Lightning, increased Segwit adoption and batching, digital asset on Liquid and Schnor Signatures and MAST coming big steps closer.

Now all the hype is died out Bitcoin devs can finally focus on real innovation again. They are making huge progress to fuel the next bull run!

Strong price foundations are set

Always when I meet new people I can’t resist to share my enthusiasm about Bitcoin and tell about it in the hope that they will investigate it when they come home and maybe even buy some. When Bitcoin reached 5,000 dollar in the last run I became a little hesitant to advice anyone to buy, because I was afraid that a crash would follow soon after to leave them with a loss. When the price rose to 20,000 this feeling got worse every day.

Today I feel like I felt in 2014 when Bitcoin traded between 200 and 400 dollar, extremely confident to advice someone to buy for the long term and not afraid for a huge crash at all. Of course the price could go some lower, but the chance of a devastating crash is highly unlikely at this point as long as the network is able to function properly.

Around 8 months ago a bitcoin was priced as high as today

The 14th of November last year the Bitcoin price was at the same level as today, but in my opinion the valuation has changed significantly thus the value of a bitcoin today is much higher for me. A bitcoin priced at 6500 dollar 8 months ago was valued high because a strong rise happened recently where the price multiplied a few times within a few months. That time a crash to around 1000 dollar was very possible while a short term gain (in the same bull run) to 50k was about the maximum to imagine.

Today a 6500 dollar bitcoin is very cheap in my opinion because we have just seen a big crash and I think a further drop of more than 30% is highly unlikely. The maximum imaginable upside (in one bull run) now is way higher today, I would say 350k.

This means that a bitcoin in November 2017 had a much bigger likely downside potential and a much smaller imaginable short term upside potential while the price was the same. I think the Bitcoin price today is near the lowest point it will ever go and I am very confident to advice people to invest again!

It is very likely that Bitcoin is trading around the lowest point it will ever reach, thus the downside potential is very limited and the upside potential is huge. This is the perfect time to dollar average into the next bull run and I am very confident to advice people to do so.

We are buying time to prepare for mass adoption

In 2017 Bitcoin or any cryptocurrency was not ready for mass adoption yet, so if the bull run continued any longer huge problems would appear anyway. Today the capacity of Bitcoin is much bigger, especially when the Lightning Network of Bitcoin and Litecoin are connected through atomic swaps. It would be too positive to claim that Bitcoin is ready for mass adoption today, but it improved greatly in the recent months and scaling goes exponential from now on. Every day the bear market takes longer we will be better prepared for a huge bull run or even hyper bitcoinization in the future!

In 2017 we were not ready for mass adoption, today we are coming close. Every day the bear market continues we will be better prepared for the next run.

Conclusion:

The bear market is painful but very good for the overall health of Bitcoin. I am happy to see the price rise again, but in my opinion a longer bear market would be worth it to destroy fake bitcoins like Ripple and Bcash or at least make them irrelevant (would be sad for the investors, but these projects bring a lot of confusion, are misleading newbies and Bcash is even one of the biggest attack vectors for Bitcoin). Anyway, Bitcoin is fundamentally stronger than ever and priced extremely low at the moment!

Disclaimer
This is no financial advice, just my view on the market.

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