How do bearish cryptocurrency markets work

Bear markets are not fun, But it’s also not the end (usually).

The Big Picture: The crypto market is still very new. There are risks and shaky techniques, many of which have failed in a spectacular fashion that is getting attention this week. But at the same time, the industry is stronger today than it was in the Crypto Winter of 2018, the last bear market.

• A bear market is traditionally seen as a time when an asset is trading below its previous high of 20% or more, usually accompanied by a lot of pessimism about the near-term future.
• But this is a nonsensical way of thinking about cryptocurrencies. The 20% drop might just be a weird Tuesday.

however, Maybe we got to the bear. The mood has to change, and we just might be there.

• Bitcoin down to less than half of its all-time high of $69,045 from November 10. Perhaps that alone is enough to call this bear, but if it drops below $20,000 (the previous bull’s all-time high), it will be a strong token.

But in coding, it’s not truly A bear market until there are real consequences, such as:

• close boxes,
• shutter startup or
• ‘Established’ crypto firms begin to announce layoffs

be clever: This is where things are different this time. Billions of dollars committed to building the industry. This year alone, investment funds that manage more than $1 billion have been announced, including Haun Ventures, Electric Capital, the new Andreessen-Horowitz Fund, FTX Ventures and more.

• That’s enough to launch several companies as well as boost their best bets in tough times.

Brady’s Thoughts Bubble: Cryptocurrency won’t be “dead” after a sharp downturn, but it may be withdrawing from the national conversation once again. Regardless, the sector will continue.

• One of these days, something will get people excited again, and the market will come back again.

context: In 2018, the bear market started when news started circulating that the US Securities and Exchange Commission was knocking on the doors of startups funded by Initial Coin Offerings (ICOs).

• At the time, it was hard to buy anything but bitcoins with dollars. So excited investors bought bitcoins, traded them for ether, and then bought into ICOs. This drove the price of everything up.
• The demand for ICOs was essentially the entirety of the demand for cryptocurrencies, so when it dried up, the entire industry dried up.

Today, there is no single clear reason, in part because the cryptocurrency market has more use cases and companies in operation now.

• Having learned from 2018, crypto companies are set up.
• As early as 2021, the projects began to hedge their volatile Treasury holdings by converting part of their funds into stable currencies backed by dollars, so that they could weather the deflation.

Bottom line: Bear markets are familiar. Nobody likes them, but they come on often enough that established leaders know how to get rid of them.

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