A bear market in any industry is when a market which shares prices is falling and encouraging selling. There have been many bear markets over the history of cryptocurrency, all with different durations. In this article, we will go through some of the factors of bear markets and how they affect all cryptocurrencies.
What is a bear market?
The market turns into a bear market only when prices fall due to doubt and fear. In a bear market, the downtrend of prices becomes self-sustaining, with apprehensive investors selling because of FUD (fear, uncertainty, and doubt).
Bear markets are not to be confused with bull markets, where prices do the opposite and rally up. These markets don’t just occur within crypto. They appear widely in securities and stock markets as well.
Cryptocurrency bear markets are unlike the falls within stocks and securities, however. As mentioned, they’re mainly triggered by panic selling caused by FUD, but that isn’t the only reason. Negative news about cryptocurrencies also causes the market to spiral. When this happens, the selling volume becomes larger than the buying volume, causing prices to go down.
Current bear market
The current bear market has erased $250 billion off the market value of the largest cryptocurrency, Bitcoin. The total value of all cryptocurrencies has dropped more than $700 billion, which has made this bear market not one to be missed.
However, John McAfee has high hopes for what blockchain and cryptocurrency can achieve after the bear market. “The bear market is artificially created by those powerful entities who fear cryptocurrency, but they can’t control it when it’s out of Pandora’s box, and it will not ever go back in,” he declared. “So, whether they like it or not, they will eventually have to live with it.”
The ongoing cryptocurrency bear market has seen a vast amount of projects halt development until the market cycles back around. This isn’t the case for Veritaseum however, who continue to innovate in order to bring a fundamental switch in the worldwide distribution of wealth.
Bitcoin in bear markets
One of the biggest issues within virtual currencies is their volatility. Cryptocurrencies are known for swinging high and low within the market. The largest cryptocurrency, Bitcoin, is known for having large price increases and decreases. Last year it rose all the way up to $19,000, whilst today (at the time of writing), Bitcoin’s price is at $3,480.
Even though Bitcoin is only 10 years old, it has seen its fair share of bear markets. The most recent one is being referred to as ‘crypto winter’, which made Bitcoin slide below $3,500 for the first time in 14 months.
Surprisingly, that isn’t the worst bear market Bitcoin has suffered. Bitcoin struggled in the first bear market in 2012, where its value dropped to $4.22 with a decline of 40%.
When a bear market occurs, it opens up opportunities for cheap entry points for new cryptocurrencies. However, it doesn’t mean there will only be one chance to do this. With bear markets happening regularly, there will always be times where the market is more easily accessible.
According to Azzad Asset Management, the average bear market lasts around 15 months. So buckle up kids, we’re here for the long run.