The Psychology Of Bear Markets

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The hunt for the bitcoin bottom is still ongoing as the digital asset fell below the $20,000 price point. Since the bear market is not long in the making, it is obvious that the bull market is not there yet. However, being able to determine when the cryptocurrency is as low as possible can help make smart investment choices and the past bear trends can shed light on how it could pan out.

Previous Bitcoin Bear Markets

The most recent bitcoin bear markets point to some key trends that may occur before a bitcoin bottom is established. The 2018 bear market and the 2014 bear runs have helped shed light on what to watch out for as the crypto winter rages on.

One of the very first things to look at is how long the previous bear markets had actually lasted. In the last two bears, the number of days that elapse before the market bottoms appears to be moving lower. In 2014, there were a total of 407 days before a bitcoin bottom was established, while in the 2018 bear market it was only 364 days. Given this, it is possible to expect that the duration before the market bottom will be lower this time around, but it also shows that the market is probably not there yet.

Bitcoin bear market

BTC bear market trends | Source: Arcane Research 

To hit such numbers, the market would need to hit December, which is likely when bitcoin would begin to bottom out. If history repeats itself, there would be a long period of unusually low volatility, during which investors will have the best chance of buying coins.

Another thing is the performance of the on-chain indicators, as they are usually low around when bitcoin hits its bottom. As reported by BitcoinistThese on-chain metrics hit a long-term bottom, which could help point to a bottom, or at least an approximation of a bottom. The same was the case during the previous bear markets and the current levels correspond to those same levels.

Bitcoin price chart from TradingView.com

BTC trending at $19,200 | Source: BTCUSD on TradingView.com

Low volatility in bitcoin also points to this. For example, in 2014 the low volatility range lasted 280 days, while in 2018 it lasted 130 days. It also follows the trend of a decline in the number of days it takes to reach a bottom. BTC’s current low volatility now lasts about 121 days.

Now these statistics are not an exact science as they are not the only factors determining the end of a bear and the beginning of a bull market. The most important is perhaps the most unpredictable, which is human sentiment. Ultimately, the price of bitcoin will react to the equilibrium between supply and demand in the market.

Featured image from Analytics Insight, charts from Arcane Research and TradingView.com

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