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If you've been keeping up with cryptocurrency news, or simply existing in the world, you know that inflation is up, stock prices are down, and the crypto market value is declining. Many people are wondering if crypto is in a bear market. And if so, how long will this bear market last? Of course, we cannot know with absolute certainty.
But we can analyze previous bear market cycles in both the crypto sphere and stock market and perhaps get some clues about the one we are in now.
Looking at previous crypto market cycles, we see that it typically follows Bitcoin on a four-year cycle. Bitcoin cuts the amount of BTC awarded to miners in half every four years. When the supply decreases and the demand is still there, of course, the value goes up. So BTC tends to rise in price after every Bitcoin halving and typically the rest of the crypto market follows suit. This is what happened in the spring of 2020, when a bull market ensued. The cycle we have seen is that when Bitcoin is halved, its value dramatically increases and the rest of the crypto market follows, leading to a bull run for two to three years. Then that is followed by a price decline, or bear market, for one to two years.
Even though prices have been dropping virtually across the board for most of 2022, some investors believe that the true mark of the bear market was when Terra crashed in May. If this is the case, we could be looking at up to two more years of the bear market, especially because the next Bitcoin halving is two years away.
Comparing to tech stock crashes
During the last bull market, BTC became a part of many official portfolios and has been essentially lumped in with tech stocks. Looking back at past markets, we can see when the dot-com bubble burst in the early 2000s, the resulting bear market lasted two years. If Bitcoin is now following tech stock trends, that may be a clue into the potential length of the crypto winter. This would also correspond with previous crypto bear market cycles that we discussed earlier, and is therefore another speculative reason that this crypto bear market could last two years.
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