According to Blockworks editor David Canellis, BTC is now on the brink of enduring its longest bear market in its 14-year history.
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This crypto winter has been oh so harsh — and battered investors have had much more to contend with than a slump in Bitcoin's price. If staggering numbers of job cuts were the shot, crushing bankruptcies engulfing major companies were the chaser.
Talk of Bitcoin making a triumphant return to new all-time highs has practically vanished, not to mention breathless speculation that the world's biggest cryptocurrency could crack six figures. But for the hardened believers who are still HODLing on for dear life (with countless retail investors already heading for the exit,) the burning question is this: How much longer is this bruising bear market going to last?
According to Blockworks editor David Canellis, BTC is now on the brink of enduring its longest bear market in its 14-year history. (And given the current economic climate, there's no suggestion of a reversal in fortunes anytime soon.)
Canellis notes that the traditional definition sees a dreaded bear market declared after an asset trades 20% below its previous high for at least two months. In order for the contraction to end, said asset must trade 20% above recent lows for a month or more.
CoinMarketCap data shows that Bitcoin's most recent low stands at $15,599.05 — coinciding with FTX's dramatic implosion late last year. With prices currently standing at $16,863, and remaining flat as a pancake this week, the world's biggest cryptocurrency has only gained 8% since hitting rock bottom.
In a Twitter thread, Canellis noted that the latest bear market formally commenced in February 2021, and has been running for 336 days. Previous routs in 2014 and 2018 lasted for 374 and 390 days respectively, he said — adding:
"This bear market is clearly different than the rest. Until now, Bitcoin has only existed during bullish macro sentiment."
And this is a very compelling point. BTC has never operated in an environment where interest rates have been this high.
What's Next?
Bitcoin has generally operated on four-year cycles governed by "the halving" — and this is when the reward that miners receive for adding blocks to the blockchain is slashed in half. The last halving event, in May 2020, created palpable excitement and helped set the stage for BTC to accelerate.
Canellis noted that the next one is due to take place in April 2024 — meaning that, based on the theory that halvings help catalyze bullish action, there's another six months of misery afoot before momentum builds. One fly in the ointment is this: BTC is far more closely correlated to the stock market than it was a couple of years ago, meaning it's possible next time could be different.
In his eyes, "the halving factor seems to be the primary bull case for BTC over the next 18 months" — and even then, the days of face-melting returns may be well and truly over. He wrote:
"Bull market returns are shrinking with every run. BTC pumped more than 36,000% between 2010-2011, and down to 19,000% in 2012-2013. The most recent prolonged bitcoin rally converted to around 1,500% at best. Still not bad, but opportunity is clearly shrinking."
