Crypto winter is back, and with how mainstream Bitcoin, Ethereum, and other altcoins have become in recent years, more eyes are watching it unfold and are caught up in the chaos than ever before.
Making matters worse, risk assets, in general, are struggling due to a potential recession on the horizon –– the first recession the cryptocurrency asset class has ever faced. With all factors combined, the result has been the most bearish sentiment in Bitcoin yet.
Could Bitcoin see a recovery, or will things continue to get worse？ PrimeXBT Research has released the below Bitcoin bear market comparison to get a better understanding of where price action is relative to past market cycles.
The Cyclical Nature of Cryptocurrencies
All markets are cyclical and switch from phases of bullish or bearish sentiment and corresponding price action. Waves of positive sentiment, news, and price action arrive all at once, pushing prices to substantial new highs. When those waves end and popular opinion switches bearish, the news becomes negative, and price action begins to reflect these changes, chaos can ensue.
In speculative assets like Bitcoin and other cryptocurrencies, these phases are amplified by impulsive behaviors and counterproductive investor emotions such as fear and greed. As a result, price movements can be sharp and extreme. Past bull cycles in Bitcoin have reached as much as 50,000% in two years during the cryptocurrencys earliest days. While the worst drawdowns ever have wiped out as much as 94% of gains.
The most recent crypto winter has cut Bitcoin price down from a high of over $68,000 to a low of under $18,000, shedding a full $50,000 per coin price drop. In total dollar amounts, there has never been a worse drawdown. However, when dealing with percentages, the current bear market could have a lot more to plummet. At the very same time, Bitcoin price is reaching historical oversold levels and at extremely low prices relative to the history of its price action.
The Complete History of Bitcoin Bear Markets Compared
During the first six months of 2011, Bitcoin price shot up more than 10,000%, reaching over $30 per BTC. After the fast and furious move, price retraced nearly 94% before the bottom was put in. The fall from $30 to $2 each was felt, but anyone who held onto their coins would get a follow-up rally of more than 60,000% gains. The 2011 bear market lasted only 623 days before a new all-time high was set.
Prior to what analysts pinpoint as the 2013 peak, Bitcoin price had a 74% pullback. It is this correction that PrimeXBT Research calls attention to as an important reminder that even such a drawdown doesnt necessarily mean the end of a cycle. Ultimately, after a more than 60,000% climb from the previous bear market bottom, the top cryptocurrency by market cap experienced what most analysts state was the longest bear market on record for Bitcoin.
It took an 86% drawdown, a devastating double bottom, and over 1246 days before setting new all-time highs. Price fell from over $1,200 to barely over $150 per BTC.
From the 2015 bear market low to the next 2017 cycle high, price appreciated by more than 11,000%. It was this rally that really put crypto on the map and made Bitcoin a household name. The asset is still not fully understood or widely used by the mainstream, but few these days are unaware of its existence.
From the astronomical high of $20,000 per coin, BTC collapsed 84% to $3,200 during the 2018 crypto winter. It was during this time when PrimeXBT launched and allowed traders to short BTC and altcoins. 1099 days passed before the top cryptocurrency set a new all-time high.
PrimeXBT Research: The Time To Prepare Is Now
Where is Bitcoins price now when compared to the data provided by PrimeXBT Research？ Currently, the drawdown matches the short pause in 2013 before Bitcoin ultimately rallied another 1850%, following a sharp 74% drawdown. If the most prominent cryptocurrency in the world by market cap falls further, the losses will align closer with past bear markets at 84-86% drawdown.
An 84-86% cumulative fall in Bitcoin would take the price per coin to right around $10,000 each. If the current level holds, a squeeze of bearish sentiment given the extreme panic and widespread recession fear could provide the potential push for renewed bullishness.
Bitcoin price is currently trading at around $20,000 per coin –– a level that acted as a previous resistance in 2017. The current level must hold as resistance turned support, or else more significant lows are possible. Ultimately, it is time to watch and begin preparing for another bull market, regardless of whether Bitcoin continues to fall lower. At the same time, it isnt safe to go too heavy in crypto, considering the risk of further drawdown.
Using PrimeXBT advanced trading tools, traders can short Bitcoin during downtrends and go long when the trend turns bullish. The same platform lets you buy crypto and trade traditional assets like gold, oil, or the S&P 500 alongside Bitcoin, Ethereum, and other top coins from categories like the Metaverse, GameFi, or DeFi. The all-in-one solution allows traders to build a risk-averse trading portfolio and manage against potential losses while simultaneously maximizing profitability. Survive crypto winter using PrimeXBT.
