STUDY: Crypto Bear Market Could Span Over 4 Years
*The views and conclusions expressed in this post are for educational purposes only and do not constitute investment or trading advice.
Recent price movements in crypto markets have puzzled investors and observers leading to speculation that the market is poised to make new highs. Most observers are speculating that the bottom of Bitcoin's correction from the $20,000 level was around $3,100. Many are citing on-chain data, market structure, and sentiment as reasons for a bullish case.
However, taking a look at the current market structure and on-chain data while making comparisons with previous timeframes leads to a bearish case. One conclusion we can make is that on-chain data still demonstrates a bearish case (see exhibit A). What is more, over time the market mimics past behaviour and forms very similar price action and market structure (see exhibits B through D). As a result, the crypto bear market could span a total of 4.6 years or 1680 days with our current position comparable to where we were during May 2014 of the 2014/2015 bear market (see exhibit E). The good news is that we are over 1.4 years into the bear market and may be only 1.7 years from the bottom.
Watch for the formation of a descending triangle pattern near the current level and another break of $6,000. This will serve as a good confirmation of the findings in this study.
Exhibit A:
*Bitcoin's NVT (with daily sample) is currently heavily overvalued and is comparable to May 2014 of the previous bear market. Bitcoin's Network Momentum also has room to move lower.
Exhibit B:
*Current market structure.
Exhibit C:
*2014-2015 market structure.
Exhibit D:
*2011 market structure.
Exhibit E:
Other data that points to a bearish case can be found within my experimental manufacturing PMI comparison where crypto is tied to the overall global economic cycle which is currently trending toward contraction:
Recent price movements in crypto markets have puzzled investors and observers leading to speculation that the market is poised to make new highs. Most observers are speculating that the bottom of Bitcoin's correction from the $20,000 level was around $3,100. Many are citing on-chain data, market structure, and sentiment as reasons for a bullish case.
However, taking a look at the current market structure and on-chain data while making comparisons with previous timeframes leads to a bearish case. One conclusion we can make is that on-chain data still demonstrates a bearish case (see exhibit A). What is more, over time the market mimics past behaviour and forms very similar price action and market structure (see exhibits B through D). As a result, the crypto bear market could span a total of 4.6 years or 1680 days with our current position comparable to where we were during May 2014 of the 2014/2015 bear market (see exhibit E). The good news is that we are over 1.4 years into the bear market and may be only 1.7 years from the bottom.
Watch for the formation of a descending triangle pattern near the current level and another break of $6,000. This will serve as a good confirmation of the findings in this study.
Exhibit A:
*Bitcoin's NVT (with daily sample) is currently heavily overvalued and is comparable to May 2014 of the previous bear market. Bitcoin's Network Momentum also has room to move lower.
Exhibit B:
*Current market structure.
Exhibit C:
*2014-2015 market structure.
Exhibit D:
*2011 market structure.
Exhibit E:
Other data that points to a bearish case can be found within my experimental manufacturing PMI comparison where crypto is tied to the overall global economic cycle which is currently trending toward contraction:
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