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Bitcoin’s Bear Market Mirrors Previous Cycles in Length, Says Arcane Report

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VOC, Voice of Crypto, Bitcoin, BTC, Crypto

Key Insights

  • The market has yet to recover fully, even three weeks after one of the largest crypto crashes of the year when FTX collapsed.
  • 49% of Bitcoin holders are currently at losses, 6% are at break even, and 45% of Bitcoin holders are still in profit.
  • The crypto market cap at the height of the bull run in November 2021 was at a 3 trillion dollar high.

Crypto Bear Market

Bankruptcies, heavy losses, and shrinking profit margins on even the smallest of trades are signs of a bear market as serious as the one the crypto market is currently in.

The market has yet to recover fully, even three weeks after one of the largest crypto crashes of the year when FTX collapsed.

One thing almost everyone in the market has in common at this point is that be it miners, whales, shrimp, or sharks; the crypto market is currently in the red for most of its participants.

Snapshot showing the token summary of Bitcoin, VOC, Voice of crypto

Snapshot showing the token summary of Bitcoin | Source: CoinMarketCap

According to the snapshot above, 49% of Bitcoin holders are currently at losses, 6% are at break even, and 45% of Bitcoin holders are still in profit.

The crypto market cap at the height of the bull run in November 2021 was at a 3 trillion dollar high. However, this figure has dropped drastically, as the global crypto market cap now sits at about $859 billion at the time of writing.

Analysts worldwide continue combing the Bitcoin charts to find a clue about where the price of the cryptocurrency may be headed, where the Bitcoin bottom is, and when the bear market is likely to end.

While some analysts have come up with mildly viable answers, others have come up with more compelling ones.

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One of these possible answers is from a report shared by the digital asset research platform Arcane Research.

This report, titled “ahead of the curve,” has interesting insights about the current bear market and what may happen shortly.

Is the Bear Market Close To Being Over?

According to the report by Arcane research, some aspects of this current bear market match those of the 2014 and 2018 bear markets, particularly in length.

According to the report, the current Bitcoin bear market is now similar in length to that of the 2014–15 and 2018 bear markets.

Arcane Research notes in its report that BTC has now experienced a maximum drawdown of 77% in this cycle from peak to bottom, with the latest bottom taking place 376 days after the $69,000 top on November 10, 2021.

The report also notes that in the 2014 bear market, the cryptocurrency’s 85% price decline lasted for 407 days, while the 84% decline during the 2018 bear market lasted 364 days.

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However, Arcane Research’s report also mentions that even though the length of the current decline has been similar to that of past cycles, the depths of the previous ones are much larger.

In simpler terms, the current bear market has dragged on for as long as the previous bear markets but has not lost as much as they have.

This is because Bitcoin is only 77% down at the time of writing, compared to the 85% drop in 2014-15 or the 84% drop in 2018.

Chart showing the correlations between 2014, 2018, and current bear markets, VOC, Voice of crypto

Chart showing the correlations between 2014, 2018, and current bear markets | Source: Arcane Research/Ahead Of The Curve

Is Bitcoin Miner Capitulation Incoming?

Miner capitulation is a fairly simple subject.

“Miner capitulation” scenarios happen when the price of Bitcoin drops so much that some miners are forced off the network.

When these miners are forced off, they sell their reserve Bitcoins, causing the price to drop further. This causes a “death spiral” that lowers the price until there are few miners left.

Arcane research, in its report, mentioned the Bitcoin miners and the chances of a potential capitulation.

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Miners are one of the major beneficiaries when the price action of Bitcoin is in a strong uptrend. At the same time, they are also one of the biggest losers when cryptocurrency enters a downtrend.

After Arcane Research argued in 2018 that a miner capitulation is unlikely, the analytics platform clarified its stance in its latest publication by stating that in the past week, the Bitcoin hashrate has significantly decreased, and miners are now selling more aggressively.

Chart showing the decline in Bitcoin’s hashrate, VOC, voice of crypto

Chart showing the decline in Bitcoin’s hashrate | Source: Arcane Research/Ahead Of The Curve

The report goes further to iterate that indebted miners would probably suffer due to the falling BTC prices.

But unlike what happened in 2018, Arcane Research says that a miner capitulation will have little to no effect on BTC pricing. This is because the pressure from new rounds of miner selling over the last few days has been lessened by the miner selling that happened in May and June.

Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

 

 

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Jim Haastrup is a freelance blockchain and metaverse writer. He helps founders, investors, startups, crypto, and blockchain enthusiasts connect with their audience and win investment through the written word.

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