According to the Bitcoin Obituary Page, Bitcoin has been declared “dead” more than 400 times. Huge fluctuations in the crypto market have put people under the impression that Bitcoin is merely a game of speculation and crypto will crash soon. Yet an increasing number of crypto-friendly investors worldwide shows that the market thinks otherwise. A more concerning question for intermediary crypto investors is, has the crypto bear market begun?
Key Indices Show the beginning of a bear market
Proof-of-work-based Bitcoin is designed to halve its mining reward every 210,000 blocks, which happens almost every four years. The last halving took place on May 11, 2020 and currently miners can get a reward of 6.25 BTC for mining a block. Given the fact that the halving in 2012 and 2016 was followed by a surging bull market, a lot of investors believed the 2020 halving would start a new bull. And a bull market came as expected, Bitcoin hit a new all-time-high and hit another in April and November respectively.
Unfortunately, Bitcoin failed to keep above its support and has slumped since November’s ATH. On 4th December, Bitcoin dropped nearly $10,000 USD (around $14,000 AUD) within an hour and hurt the entire crypto market in value rapidly. Sluggish climbing back to its ATH seemed more difficult than ever for Bitcoin. Its falling market dominance is a flaring red flag to experienced traders who believe that a dominance rate of Bitcoin under 40% is the beginning of a bear market, just like what happened to BTC’s downward performance after this May.
It is also not positive from a macroeconomic perspective since the FUD issues re continuously showing up from the Evergrande collapse to inflation fears. The omicron variant of Covid-19 also alludes to the pandemic not being over and a possible screeching halt to the global economy will not help the crypto market.
A Supercycle Bull Market for Cryptocurrency
Just like how many believe the bear market has begun, opponents believe that we are actually in the middle of a supercycle, a bull market that breaks away from the previous 4-year cycle, with no bear market in the foreseeable future.
Shreds of evidence are numerous and one of them is the incredible restoring speed of crypto’s price. Though the prices of both BTC and ETH have retreated from their ATHs, they have managed to keep above key levels. When Bitcoin’s price slumped after May, it recovered in less than six months and reached a new record-breaking price in November, which shows the amazing resilience of the global crypto market and a divergence from its usual pattern.
Top economies across the world have tended to adopt positive fiscal policies to fight against the pandemic, which may provide the crypto market with bigger cash inflows.
Therefore, it is difficult to tell where we are in the short term, but hodlers believe that the crypto market will stay in uptrend in the long run.