Whether you simply own cryptocurrency or choose to actively trade it in order to make a profit, you should take the time to familiarize yourself with the cryptocurrency market cycle. At the beginning of the year, the crypto market was still in a long bear market phase, but is this still the case? What market cycles should you be aware of in the crypto world?
Looking at Past Market Cycles
Throughout its history, the cryptocurrency market has experienced numerous ups and downs in various cycles. Experts have noticed a few overall trends with these cycles. Historically, the uptrends (or bull markets) tend to be longer than the previous downtrend (bear market), at least for Bitcoin.
Bitcoin was at the peak of a bull market in December 2017 when it hit $20,000. Soon after, it fell into a downtrend. Using historic data available as of January, crypto experts calculated Bitcoin’s overall correction is 84.5 percent. Keep in mind that while this figure is just for Bitcoin, the crypto market as a whole tends to cycle more or less in line with Bitcoin.
This Long-term Bear Market Is Highly Unusual
In the first few weeks and months of 2019, many cryptocurrency experts shared their insights into the crypto market and its bearish behavior. Before this bear market, the longest one for the crypto market had been 420 days in 2014 and 2015. By late January, the crypto bear market had already lasted 390 days, making it poised to beat that previous record.
Early Predictions of the Bear Market
Experts in the crypto world, including Vitalik Buterin, the co-founder of Ethereum, expected a correction or bear market as early as December 2017. When the total market cap for cryptocoins reached half a trillion USD, Buterin indicated that he felt this valuation was not earned. Buterin expressed that while the crypto world had made progress in things like helping the unbanked and adding value for users, it was not enough to justify that massive market cap. Buterin seems to have been on the right track and since that point, the market dropped to $119 billion by late January 2019, more than 76.2 percent.
What the Future Holds
Unfortunately, the fact that the cryptocurrency market was bearish for so long has led to many losses for investors as well as a decrease in confidence. Experts say that investors will need to psychologically recover from the losses and bear market.
Is the Bear Market Gone?
Although the bear market did indeed break the record for the longest one of its kind for crypto, experts are still divided in whether it is truly gone or not. The cryptocurrency market has begun to go back up, but there is some disagreement. Some believe this is a temporary improvement that is still part of the bull market. Others feel that it is a sign that the bear market is over, and a bull market is beginning.
A Bull Market Will Likely Arrive With Institutional Investors
Various cryptocurrency experts are in agreement that whether or not the bear market is over, a true bull market will not arrive without institutional investors. When those major investors get on board with cryptocurrency, then there will be enough push to keep crypto going strong.
Many institutional investors are working on entering the cryptocurrency world, but there are delays. Fidelity and TD Ameritrade have both indicated strong plans for incorporating crypto, as has Citigroup.
Regulation and Attitude Also Play a Role
In addition to the presence of institutional investors, for the crypto to enter a long-term bull market cycle, it would need to overcome some regulatory challenges. Regulation by the SEC is a significant concern as many unscrupulous people have taken advantage of the fervor surrounding crypto to make a profit via ICO scams. People need to gain more confidence in cryptocurrency before the market can truly soar, and this will likely come with some sort of regulation.
Conclusion
It is impossible to predict the future of the cryptocurrency market, just as it is with any other market. There is no doubt that the crypto market just underwent the longest bearish turn in its history, but most experts feel that this is over or close to it. Time will tell what the future holds for the crypto market.
Sources:
https://www.ccn.com/why-crypto-is-en-route-to-the-longest-bear-market-in-history
https://toshitimes.com/is-the-crypto-bear-market-over/
https://hackernoon.com/bitcoins-market-cycles-everything-you-need-to-know-d7a804b05c93
https://coincentral.com/a-big-picture-analysis-of-crypto-cycles-and-key-levels/