Bitcoin is one of the most impressive innovations of recent times. Coming off the global financial crisis of 2008 and its adverse implications, the world was in for a treat when Satoshi Nakamoto launched Bitcoin in 2009. And it marked a significant transformation of the financial system. Essentially, Bitcoin has provided an alternative to the traditional centralized monetary system.
A significant feature of Bitcoin is its volatility. Bitcoin price changes continuously. As a result, cycles of bull markets and bear markets characterize the Bitcoin market. And this is not unique to Bitcoin. It affects all cryptocurrencies. Understanding when Bitcoin is in the bull or bear markets is crucial as this will help you make informed investment decisions.
Experienced cryptocurrency investors will have more knowledge about the Bitcoin market and whether it is in a bear or bull market. Still, even beginners can learn how to determine which cycle the Bitcoin market is in at any given time.
This article explains why Bitcoin is not currently in a bear market. It first defines a bear market and provides its characteristics. Then, based on the bear market aspects, we will analyze current Bitcoin bear market conditions to establish whether it aligns with those of a bear market.
A cryptocurrency bear market is a sustained period of falling prices in a market. Typically, the bear market experiences a drop of at least 20% in asset value in at least two months. The price drop is due to low investor confidence in the market. Low investor confidence also causes reduced activity in the bear market, including buying and selling.
Characteristics of a bear market
Certain factors characterize bear markets. One of the main characteristics of a bear market is a declining equity value of at least 20% with a period of at least two months. The most recent bear market in Bitcoin took place in the first quarter of 2022. Bitcoin prices dropped over 60% in four months.
Another prominent feature of a bear market is low investor confidence and increased pessimism. Investors will fear that the market will face more problems and thus will avoid investing to ensure that they do not suffer losses. Existing investors can sell their assets to avoid further losses.
Finally, a Bitcoin bear market often coincides with unfavorable economic conditions in the world. For example, the world economic outlook might not be so good during a Bitcoin bear market.
Why Bitcoin is not in a bear market
Now that we have defined the bear market and identified its main characteristics, we can know if Bitcoin is currently in a bear market. Bitcoin price has been relatively stable since July, ranging between 25.000$ at the high and 19.000$ at the low. And this does not cater for the 20% drop in price that characterizes a bear market. Furthermore, the price has been relatively stable for at least three months.
Furthermore, investor confidence in a bear market is generally low. This is not the case in the Bitcoin market these days. Investor confidence is high, with many expecting the cryptocurrency market to record a bull run soon. According to cryptocurrency market enthusiasts, the Bitcoin market could enter the bull market cycle within a few months.
Bitcoin is not currently in a bear market. Investors are confident that the market will record growth soon. Furthermore, the price of Bitcoin has stagnated during the past three months.