Is The Bitcoin Bear Market Over? A Historical Analysis and Future Outlook

Key Takeaways:

• Bitcoin has faced a total of 4 bear markets in the past and is currently in the midst of its fifth.
• The longest it has ever taken Bitcoin to recover after a massive crash is a period of 36-37 months and with that precedent, the current bear market still has quite some time to go.
• The shortest Bitcoin crash and recovery phase was in early 2021, when BTC price crashed from $63,000 to under $30,000 but again recovered to touch $69,000 by November 2021.
• Bitcoin’s current price trajectory is slightly weak, however the overall recovery in 2023 looks pretty promising and an end of the current bear market might be close at hand.

A Brief History of Bitcoin Crashes & Bear Markets (2009-2022)

Bitcoin, the world’s leading crypto asset, has experienced several significant crashes and bear markets throughout its history. These downturns have tested the resilience of the digital asset, leading to periods of recovery and subsequent price rallies. Let’s take a closer look at some of the notable Bitcoin crashes and their impact on the market.

Bitcoin Bear Market 1: BTC Price Crashes from $32 to $0.01 (2011)

Time to retest previous high: ~20 months (June 2011 to February 2013)

In June 2011, Bitcoin reached an all-time high of $32. However, a rapid decline followed, with the price plummeting to just $0.01 within a few days. This crash was primarily attributed to security issues at the now-defunct Mt. Gox exchange, which suffered a major security breach resulting in the theft of 850,000 BTC. It took Bitcoin approximately the next 20 months to recover and reach its previous high of $32 in February 2013.

Bitcoin Bear Market 2: BTC Price Tanks from $1000 to $200 (2015)

Time to retest previous high: ~37 months (November 2013 – January 2017)

After reaching $1,000 in November 2013, Bitcoin experienced a significant drop, falling below $700 within a month. This decline was influenced by the Chinese central bank’s crackdown on Bitcoin, which restricted local financial institutions from handling BTC transactions. The price continued to plummet over the next two years, hitting a low of $170 in January 2015. It took Bitcoin approximately 37 months to reclaim the $1,000 price mark in January 2017.

Bitcoin Bear Market 3: BTC Price Plunges Below from $3200 After Hitting $20,000 (2017)

Time to retest previous high: ~36 months (December 2017 – December 2020)

Bitcoin’s historic bull run in 2017 saw it soar to $20,000. However, the euphoria was short-lived as the price dropped by over 60% within a few months, reaching a low of around $3,200 in December 2018. This bear market was fueled by various factors, including security issues at the Coincheck exchange, regulatory concerns, and global crypto regulation efforts. It took Bitcoin approximately 36 months to recover and reach new all-time highs.

Bitcoin Bear Market 4: BTC Price Slumps from $63,000 to under $30,000 (early 2021)

Time to retest previous high: ~6 months (April 2021 – October 2021)

In April 2021, Bitcoin reached a new all-time high of $63,000. However, it faced a significant setback shortly after, with the price dropping to as low as $29,000 within three months. Concerns surrounding Bitcoin’s environmental impact and regulatory uncertainties played a role in this mini-bear market. Nevertheless, Bitcoin quickly rebounded, returning to its all-time high in just six months.

Bitcoin Bear Market 5: BTC Price Plummets from ATH of $69,000 to under $20,000 (2022)

Time to retest previous high: yet to be determined

Bitcoin’s most recent bear market began in late 2021 when the price failed to break $70,000 and experienced a significant drop. In 2022, Bitcoin fell below $20,000 for the first time since 2020, leading to widespread market fear. This downturn was primarily attributed to the crisis of algorithmic stablecoins, particularly the depegging of TerraUSD Classic (USTC), which triggered panic and uncertainty across the crypto market. As of now, it remains uncertain when Bitcoin will reach new heights.

Bitcoin has demonstrated a historical pattern of experiencing bear markets followed by periods of recovery and price appreciation. While past performance is not indicative of future results, investors and enthusiasts are closely monitoring Bitcoin’s trajectory to determine whether the current bear market is over and if the next price rally is on the horizon.

Read More: Bitcoin Price Prediction

Deep Dive Into Bitcoin’s Current Price Action

BTC/USD | Source: TradingView

• Despite the worrisome bear market of 2022, the early days of 2023 showed some favorable green shoots for the original crypto asset of the industry – Bitcoin. As you can observe on the chart above, Bitcoin has almost regained all the losses it had made in May 2022, post the depegging fiasco in the Terra LUNA ecosystem’s algorithmic stablecoin UST.
• The growth since the beginning of 2023 has been pretty rapid too, gaining over 85% by mid-April 2023.
• Bitcoin price has also flipped several levels of resistance and is currently finding it difficult to breach past $30,000. It did attempt once, but was quickly dismissed.
• Momentarily, BTC price is trading below the 50-day exponential moving average but is still well over the 200-day exponential moving average – suggesting medium to long-term sustenance of its pullback rally.
• Thus, while the current BTC price trajectory does seem to be slightly weak amid poor market sentiments, it wouldn’t take much to stage a recovery in the near future, and a breakout beyond the $30,000 mark would be crucial for a proper recovery in the rest of the year.

Will Bitcoin Price Rise Again?

The world of cryptos is known for its volatility, and Bitcoin, being the pioneer crypto, often takes center stage when discussing market trends. After experiencing a significant bear market, investors and enthusiasts are eager to know if the tide will turn and if Bitcoin’s price will rise again. In this section, we will examine the factors that could contribute to a potential price increase in the future.

Increasing Popularity of Bitcoin Ordinals:

One factor that could positively impact Bitcoin’s price is the increasing popularity of Bitcoin Ordinals. Bitcoin Ordinals is a decentralized protocol that enables the storage of digital artifacts on the Bitcoin blockchain. This protocol has gained traction in recent times due to its unique approach to storing and representing digital assets, including artwork, profile pictures, applications, and playable games. The growing interest in Bitcoin Ordinals reflects a broader interest in Bitcoin and its underlying technology, which could potentially drive up demand and consequently impact the price positively.

The Upcoming Bitcoin Halving in 2024:

Another important factor to consider is the upcoming Bitcoin halving event scheduled for 2024. Bitcoin halving occurs approximately every four years and reduces the block reward for miners in half. Historically, Bitcoin halvings have been followed by significant price rallies. This phenomenon is attributed to the reduction in the rate at which new Bitcoins are introduced into the market, leading to increased scarcity and potentially driving up prices. While past performance does not guarantee future results, the previous halving events in 2012 and 2016 witnessed substantial price increases, sparking optimism among Bitcoin investors for a similar outcome in the upcoming halving.

While the future of Bitcoin’s price remains uncertain and is influenced by various market dynamics, several factors could potentially contribute to a rise in Bitcoin’s value. The increasing popularity of Bitcoin Ordinals showcases the expanding interest and adoption of Bitcoin’s technology. Additionally, the upcoming Bitcoin halving in 2024 has historically been associated with price rallies, although past performance is not indicative of future results. It is important to note that investing in cryptocurrencies carries inherent risks, and individuals should conduct thorough research and seek professional advice before making any investment decisions.

Additional Read: Can Bitcoin Price Read $100,000 n 2024?

So Is Bitcoin Bear Market Over? Analyzing Some Top Indicators!

1. 200-Week Exponential Moving Average

BTC/USDT | Source: TradingView

The 200-week exponential moving average (EMA) is considered a powerful long-term technical indicator in the world of crypto. It provides a smoothed average of price movements over a significant period, helping to identify the overall trend of an asset. Traders and investors often use the 200-week EMA as a guide to gauge the long-term strength and direction of the market. It helps filter out short-term volatility and provides a clearer perspective on the broader market sentiment, making it a valuable tool for making informed investment decisions.

As you can observe on the chart above, Bitcoin price is currently trading just above the 200-week exponential moving average, having broken out of it in March 2023. This is a reasonably positive indicator that there is some bullishness that has entered into the king coin and won’t be lost very easily, despite short-term weakness.

2. Weekly RSI

BTC/USDT | Source: TradingView

The weekly Relative Strength Index (RSI) is a widely used long-term technical indicator that measures the strength and momentum of an asset’s price movement. It helps identify overbought and oversold conditions in the market, signaling potential trend reversals. Traders and investors often rely on the weekly RSI to assess the underlying strength of a security over an extended period. By considering the weekly RSI, market participants can gain insights into the long-term trend and make informed decisions about potential entry or exit points in the market.

With the current weekly RSI at 54, BTC price is neither oversold nor overbought. Any value above 70-80 indicates overbought territory and a selloff may ensure. On the flip side, any value below 30-20 indicates oversold territory and a pullback rally may occur soon after.

3. Bitcoin Stock-To-Flow Model

Bitcoin Stock-To-Flow (S2F) Model | Source: https://charts.bitbo.io/stock-to-flow/

The Bitcoin Stock-to-Flow (S2F) model is a long-term technical indicator that has gained significant attention in the crypto community. It measures the scarcity of Bitcoin by comparing its existing supply (stock) to its annual production (flow). The S2F model suggests that Bitcoin’s price is influenced by its scarcity, with higher stock-to-flow ratios indicating greater scarcity and potentially higher prices. Proponents of the model argue that it has historically provided accurate price predictions for Bitcoin over longer timeframes. However, it’s important to note that the S2F model has its critics, who question its validity as a reliable forecasting tool.

Currently, as you can observe from the chart above, BTC price is trading well below the Stock/Flow Line, which indicates that the market is undervaluing the price and thus a recovery could be due soon.

The Future of Bitcoin

The future of Bitcoin holds both excitement and uncertainty. One significant event on the horizon is the Bitcoin halving scheduled for August 2024. The halving is a pre-programmed event that occurs approximately every four years, reducing the block reward miners receive for validating transactions by half. Historically, Bitcoin halvings have been followed by periods of increased demand and price rallies. This is attributed to the reduction in new supply entering the market, which enhances Bitcoin’s scarcity and potentially drives up its value.

While past performance does not guarantee future results, some proponents believe that the halving event could contribute to a potential recovery in Bitcoin prices. They argue that the reduced supply issuance could increase Bitcoin’s scarcity, attracting more investors and driving up demand. However, it’s important to note that the cryptocurrency market is highly volatile and subject to various factors such as market sentiment, regulatory developments, and technological advancements.

As with any investment, it is crucial to conduct thorough research and exercise caution when making decisions regarding Bitcoin or any other cryptocurrency. The future of Bitcoin is influenced by a complex interplay of economic, technological, and market factors, making it challenging to predict with certainty.

Read more: How to buy Bitcoin in India