If you've kept up with cryptocurrency news, or if you simply exist in the world, you know that inflation is rising, stock prices are falling, and the value of the cryptocurrency market is falling. Many wonder if cryptocurrencies are in a bear market. And if so, how long will this bear market last? Obviously we cannot know with absolute certainty.
But we can analyze previous bear market cycles, both in the cryptocurrency sphere and the stock market, and perhaps get some clues as to what we are in now.
If we look at previous cryptocurrency market cycles, we see that they typically follow Bitcoin with a four-year cycle. Bitcoin halves the amount of BTC allotted to miners every four years. When supply decreases and demand is still there, obviously the value goes up. So BTC tends to go up in price after every Bitcoin halving and usually the rest of the cryptocurrency market follows suit. This is what happened in the spring of 2020 when a bull market was born. The cycle we have seen is that when Bitcoin is halved, its value drastically increases and the rest of the cryptocurrency market follows, leading to a bull run for two to three years. Then follows a decline in prices, or bear market, for one or two years.
While prices have fallen pretty much across the board for most of 2022, some investors believe the real sign of the bear market was the Earth crash in May. If this is the case, we could be facing another two years of bear market, especially as the next halving of Bitcoin will take place in two years.
Comparison with the collapses of tech stocks
During the latest bull market, BTC (here the quotation in real time) has become part of many official portfolios and has essentially been associated with technology stocks. Looking at past markets, we can see that when the dot-com bubble burst in the early 2000s, the resulting bear market lasted for two years. If Bitcoin is following the trend of tech stocks, this could be a clue to the potential length of cryptocurrency winter. This would also match previous cryptocurrency bear market cycles that we talked about earlier, and thus is another speculative reason why this cryptocurrency bear market could last two years.