If this is a crypto bear market, how long can it last?

Three months have passed since the price of Bitcoin hit an all-time high (just under $65,000). For most of the past two months, Bitcoin (Bitcoin) Has been trading in the range of USD 30,000 to USD 40,000, which is 54% below its peak

At the time of the economic downturn, many analysts’ predictions are just the opposite—the bull market cycle will hit a record high in a few months—and some even speculate that the price of BTC will reach six figures this year.

what happens? The current market downturn is just a short-lived on the upward trajectory, or is the cryptocurrency market returning to the long-term bearish zone last seen in 2018?

Bullish indicator

Bitcoin’s historical price activity has a striking correlation with its halving cycle, with the previous historical high being reached within 12 to 18 months after the halving. Plan BThe creator of the Stock-to-Flow BTC price model is one of the most outspoken supporters of this.On Twitter, the analyst remains Resolutely believe that the stock flow cross-asset model (S2FX) predicts further bullish action, pointing out a similar temporary downturn before the epic rebound in the previous cycle.

So far, the S2FX model has been one of Bitcoin’s most accurate price prediction indicators for many years. In addition, on-chain indicators seem to support the theory that bearish sentiment may be short-lived. For example, shortly after the Bitcoin price peaked in April, traders suddenly began to transfer funds to the exchange, ending an almost uninterrupted eight months of HODLing.

Igneus Terrenus, head of communications at the cryptocurrency exchange Bybit, believes that short-term traders should be responsible for the sell-off after the high price of BTC. He told Cointelegraph:

“A series of deleveraging events has deterred many short-term speculators, and their surrender accounted for most of the realized losses in recent months. Although the optimism at the beginning of the year has almost dissipated, the overall bearish sentiment of whales and long-term holders towards the market Still full of confidence.”

However, in recent weeks, there has been another outflow of funds from the trading platform. Glassnode’s realized HODL ratio, which is Repertoire The willingness of investors to sell their holdings also seems to reflect similar patterns in previous cycles.

Richard Nie, Bingbon’s chief research analyst, believes that the flow of transactions is very convincing. In an interview with Cointelegraph, he agreed that these indicators indicate a bullish shift. “We should pay attention to the number of whale holders and the number of BTC held on exchanges,” he said, adding that “as more BTC is withdrawn from exchanges and transferred to private addresses, this is a strong bullish sign .”

Dead GreenspanThe founder and CEO of Quantum Economics told Cointelegraph: “Currently, the exchange’s crypto trading volume is the lowest in the whole year. Once trading picks up again, this will be a good sign that the calm is over.”

Broader bullish indicators

Project funding is another important indicator of market sentiment, and 2021 is an outstanding year for crypto startups. As reported by Cointelegraph, The crypto industry received more funds in the first quarter of 2021 than the total in 2020, attracting US$2.6 billion.

The downturn since April does not seem to destroy the appetite of venture capitalists at all. In late May, Stablecoin issuer Circle raised $440 million, Just a few days later, Mike Novogratz Cryptology Asset Group announced that it will launch a $100 million crypto investment fund.

By mid-June, Bloomberg had Report The total amount of venture capital investment in cryptocurrencies this year has exceeded 17 billion U.S. dollars.Even discount the 10 billion U.S. dollars Block.one enters its new exchange, Enough to prove that the performance of the crypto market in the second quarter has not yet affected the growth of venture capital.

There are also macro market factors to consider.In the continuing uncertainty surrounding the state of the global economy, some, including Robert Kiyosaki-author Rich dad poor dad—— Predict a stock market crash. In Kiyosaki’s case, he has always encouraged his followers to hoard gold and Bitcoin.There are signs that Bitcoin may Become more relevant Stocks, but does the massive stock sell-off mean that investors will eventually use BTC as a safe-haven asset?

Further considerations are Bitcoin’s upcoming Taproot upgrade Since it was activated in November. It marks the first upgrade of the Bitcoin network since the Segregated Witness (SegWit) fork occurred in August 2017. Of course, it then set a record high of US$20,000 in December 2017. It is difficult to know whether history will repeat itself in this regard, or whether there is any direct link between the upgrade and the market, but it is worth keeping in mind.

In the form of a regulator

There is no doubt that the biggest bearish force affecting the market in the past few months has been regulation.Most notably, the Chinese government’s The mining ban has created widespread uncertaintyMany large-scale mining operations have been forced to offline-in some cases permanent, and in other cases temporarily offline because of their relocation from China to new locations.This migration has undoubtedly paid a huge price, and at the same time, the difficulty of Bitcoin mining has also experienced The biggest drop in history, Only confirmed the impact of the suppression on the network.

However, lawmakers in other countries have recently begun to study encryption carefully.India only relaxed its stance on cryptocurrency in 2020 and may become Consider the ban, Although the situation continue to develop.

The UK Financial Conduct Authority also recently launched a campaign against Binance, ordering it Stop conducting regulated activities domestic.Now, crypto companies are Withdrawal of permission application In the UK, when users find themselves Locked out of the exchange Through their bank.

In general, Binance has been subject to regulatory pressures from all over the world due to various reasons. At the same time, it is unclear whether the regulator specifically targets Binance, or whether the exchange is only seen as a representative of other crypto industries.

related: Binance in line of sight: Are regulators concerned about encryption?

Institutional analysts have also been making ominous predictions about the price of Bitcoin. JPMorgan Chase warning The recent settings of BTC still look unstable. Although these developments are unlikely to be as dramatic as China’s mining ban, they have not helped market confidence.

Daniele Bernardi, Chief Executive Officer Fintech Management Company The Diaman Group believes there is reason to be cautious, and he told Cointelegraph:

“If we analyze the bitcoin price based on the S2F model, the bitcoin price may rise twice in the short term. However, at Diaman, we have also developed a model based on the adoption rate. According to this model, the ATH of $64,000 is fair of.”

A stronger bull market case?

As previously suggested, most signals point to this The bull market is only at the midpoint, Is there enough evidence to reverse this direction? Considering everything-not surprisingly-it is too early to make a conclusion.On the one hand, there is regulatory turmoil and a large number of cut back In terms of transaction volume, it shows the overall lack of interest and participation. On the other hand, there are some convincing indicators on the chain and investor sentiment indicators that seem to be increasingly conducive to the continued bull market.

related: As the impact on Bitcoin price is still unclear, GBTC unlocks the advantage closer

However, in practice, regulatory issues continue to plague the market, proving that price models and venture capital may not alleviate concerns. If there is another major suppression, the bull market may not be able to recover after all.

Although it may be the biggest test of mining safety in history, the fact that the price has remained above $30,000 so far is a testament to the bullish power. If the current regulatory situation begins to calm down, the bullish part of the market cycle may still reach the expected conclusion.