The recent rise and fall of Bitcoin (BTC) has made crypto investors “are we heading for a long-term bear market?” leads to questions. Detail cryptocoin.com‘in.
Will the bear market for Bitcoin get longer?
Bitcoin has had a stunning journey throughout 2021, opening the year with a meteoric bull run that saw the asset surge to an unprecedented $63,576 before sharp pullbacks caused the cryptocurrency to drop more than 50%. Given that BTC went through its third halving in May 2020, market commentators were largely optimistic about Bitcoin’s performance, but despite hitting new highs in November, BTC has consistently underperformed since then. Is this the start of a long-term bear market? It is necessary to evaluate the recent performance of Bitcoin, recognizing that the large-scale decline in stocks worldwide due to rising global inflation rates and Covid uncertainty affected the 4th quarter crypto market, which hindered the growth of BTC.
The all-time high BTC/USD experienced in 2021 creates a “double top” pattern in terms of technical analysis – this may be a cause for concern regarding the asset’s 2022 prospects. As financial journalist Lawrence Carrel points out in Forbes, double tops can indicate that investors are looking to make an eventual profit for the uptrend. This event can lead to a downtrend where traders may want to profit from selling stocks on a downtrend. However, it is important to note that double top trends are not necessarily all that influential in the world of cryptocurrencies, due to the much higher level of investor sentiment that plays a role in determining the value of an asset as opposed to the inherent value of the asset. When an asset is down more than 20%, it is largely considered to be in a bear market. While the highly volatile fluctuations make this seem like an arbitrary number, Bitcoin’s 36.5% drop from its all-time high in November makes it particularly worrying. So what does Bitcoin look like for 2022?
break the cycle
Few observable patterns exist in an environment as volatile as cryptocurrency, but Bitcoin’s short lifespan has proven time and again that halving events typically herald parabolic price spikes that can accelerate BTC’s value. For example, Bitcoin’s first halving event in November 2012 saw the asset enter a rally that sent its price from $12 to $1,217 a year later. Bitcoin’s second halving event in July 2016 pushed the price of BTC from $647 to $19,800 by December 2017. As we can see from the available data, Bitcoin’s third halving event – a pre-programmed event where the volume of BTC given to its miners is halved approximately every four years – has so far failed to live up to the trends of the past. Bitcoin’s below-average performance in relation to previous halving cycles could result in a drop in sentiment affecting investor confidence.
“Many market participants hold firm in their predictions that the price of Bitcoin will eventually reach $100,000, but some say these levels will not be reached until 2025 or later,” said Maxim Manturov, head of investment research at Freedom Finance Europe. Manturaov continued, “BTC was previously expected to trade at $100,000 by the end of 2022, but in general, it is worth understanding that such risky assets are extremely sensitive to interest rates and could become even more volatile if rates rise.”
Reasons to stay on the rise
It is worth noting that despite the tumultuous end of Q4 2021, there are a lot of bullish sentiments surrounding Bitcoin, and the asset’s recent bounce from its early 2022 low of $40,655 indicates that BTC still has a large number of investors willing to buy. . The latest halving cycle for Bitcoin may not have delivered the staggering highs of its last two incarnations, but news that El Salvador has released alongside major financial players like PayPal and Visa has brought unprecedented levels of institutional adoption.
As Ariel Santos-Alborna noted in Seeking Alpha, “There are currently just over 800 crypto-focused hedge funds and venture capital firms. Almost every financial institution tries to maximize profits and losses at the end of the year to demonstrate positive metrics and attract more investors in the new year.” Bitcoin’s recent performance may signal a bear market, but it’s important to note that all bets are off in the world of cryptocurrencies and BTC’s newfound institutional interest could provide a platform for the asset to flourish.
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