The crypto market may be entering a new bearish trend. How long will it have to endure?
Last week, the total capitalisation of the crypto market dipped below $2 trillion. Since then, Bitcoin has continued to fall with no clear sign of an imminent rebound, so many prominent cryptocurrency enthusiasts and cryptocurrency executives are increasingly speculating that a bearish trend is coming. Most agree that it will last until at least 2024. Here’s a closer look at the experts’ views.
As a reminder, crypto-war is a period of falling prices in the digital asset industry. Usually, during this period, investors try to survive and the most courageous hold their positions to the bottom. Be that as it may, the phase is accompanied by an active increase in the number of sellers who dump assets and thereby provoke an even bigger drop in rates.
Bitcoin’s behaviour now really looks like the beginning of a prolonged downward trend. Specifically, the cryptocurrency hit a local bottom today at $36350. Here is a daily chart of BTC for clarity.
Bitcoin daily chart
That said, the bearish trend is traditionally considered the most profitable period to accumulate the cryptocurrency, i.e. to buy it at low prices. Read more about the challenges for cryptozymes in a separate piece.
What will happen to the cryptocurrency market
According to the creator of Etherium, Vitalik Buterin, cryptozyme could be very beneficial for the industry as a whole, as it will give a boost to technology improvements. Lower prices for cryptocurrencies can encourage long-term sustainable projects while eliminating short-term speculative demand.
Here’s Vitalik’s rejoinder, in which he shares his perspective on what’s happening.
Cryptozyme is a time when many of the cryptocurrency projects are dying out. Thanks to this, it is possible to understand which startups are actually long term, both in terms of their technical component and teams.
In other words, if the growth phase of the market was a time to make money, the reverse trend will be a test for cryptocurrency project developers. This is the environment in which they will have to survive due to falling exchange rates and shrinking funding. That said, however, developers will need to continue to develop their own platforms.
Bitcoin in decline
If Buterin’s version coincides with reality, cryptocurrency projects will definitely have plenty of time to improve technology before the next bullish rally. That said, Du Jun, co-founder of cryptocurrency exchange Huobi, believes that the next bull run won’t happen before 2024. And it will probably be associated with another Bitcoin halving.
As a reminder, a halving is a procedure for reducing the reward for a block on the Bitcoin network. The last time it happened was in May 2020: then the reward was reduced from 12.5 to 6.25 BTC per block. This idea of the mechanism belongs to the creator of the cryptocurrency Satoshi Nakamoto. In this way, he wanted to achieve lower Bitcoin inflation and at the same time reduce the issuance rate in order to make BTC a more attractive asset given its relative scarcity.
Three previous halvings on the Bitcoin price chart
According to Cointelegraph’s sources, all three previous BTC halvings have caused the cryptocurrency’s price to subsequently rise due to a sharp decline in its supply.
Note that such a thing could be a coincidence - at the very least, due to the fact that the coin industry's rise and fall cycle lasts for roughly four years. However, there are no less bitcoins in circulation because of the halving: only the volume of new cryptocurrency is decreasing. The rest of the coins are still where they were.
Halving happens every 210,000 blocks, or about once every four years. Well, the upcoming reduction in miners’ rewards will reduce their income per block from 6.25 BTC to 3.125 BTC. On top of that, Du Jun compared his prediction to the 2018 cryptozyme. Here’s his rejoinder, cited by CryptoSlate.
If this trend continues, it means we are now still in the early stages of decline. Following this cycle, only in late 2024 or early 2025 will we get to welcome the next bull run.
In other words, the expert leans towards the prospect of negative developments in the coin industry. That said, some analysts believe that prolonged bearish trends are a thing of the past, as cryptocurrencies have become popular around the world over the last growth cycle. El Salvador's recognition of Bitcoin as official tender comes as a pleasant surprise.
President of El Salvador Nayib Buquele
We think that so far, what's happening in the cryptocurrency market does hint at the prospect of a negative scenario. Still, after hitting their highs in November, many cryptocurrencies have continued to fall, and are now tens of percent off their records. Be that as it may, definitive confirmation of this remains to be seen. Still, in the world of cryptocurrencies, you can't be completely sure of anything.
What do you think about it? Share your opinion in our Millionaire Crypto Chat. There we will talk about other topics related to the blockchain and decentralisation industry.
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