The ongoing bear market in the crypto industry has triggered fear, panic, and uncertainty among investors. The downward trend began when the global crypto market capitalization fell below the $2 trillion mark in January 2022. Subsequently, Bitcoin (BTC) saw a decline of over 70% from its peak of $69,044.77 on Nov. 10, 2021. Similarly, other major cryptocurrencies such as Ether (ETH), Solana (SOL), Avalanche (AVAX), and Dogecoin (DOGE) also experienced a decrease of around 90%.
So, what signs should we look for to predict the end of the bear market? Let’s delve into the causes of the 2022 bear market.
Catalysts of the 2022 Bear Market
Several factors contributed to the current bear market:
- The build-up to the bear market started in 2021, with regulatory threats and actions such as the SEC’s lawsuit against Ripple and China’s ban on Bitcoin mining.
- Global inflation and rising interest rates added to fear and uncertainty, affecting crypto investments.
- The Federal Reserve’s measures to combat inflation led to a decrease in disposable income and reduced investments in risky assets like cryptocurrencies.
- Leverage from investors and lack of protective mechanisms in the crypto market intensified the market downturn.
Indicators of the End of the Bear Market
Analysts study market cycles to forecast the end of a bear market. The key phases include accumulation, markup, distribution, and mark-down. For Bitcoin, this cycle typically spans four years. Grayscale suggests that the bear market begins when Bitcoin’s realized price exceeds its market price. This occurred on June 13, 2022. If historical patterns repeat, the bear market could end between November and December 2022.
Duration Predictions by Bitcoin Traders
Bitcoin traders often look at the halving cycle to anticipate the next bull run. Historically, Bitcoin has peaked within 18 months of each block reward halving. As the 2022 bear market aligns with various unique factors, such as macroeconomic variables and leverage, predicting its duration remains complex. Moreover, a correlation between the stock market and Bitcoin adds an unprecedented element to this bear market.
Disclaimer: The views expressed in this article are of the author’s and may not represent those of Cointelegraph.com. All investment decisions carry risks, so thorough research is essential before making any financial moves.
Image Source: Varga Jozsef Zoltan/shutterstock
