Is Bitcoin (BTC) still in the bear market, or is this gloomy period finally behind us? In January 2023, we proposed a study on the end of the bear market, with a forecast around May 25, 2023. Considering the recent bullish rebound experienced by the cryptocurrency market, let’s come back to this study together and finally answer this question.
Bear Market vs. Bull Run?
It’s no longer a secret, Bitcoin (BTC) is experiencing a long period of negative annual returns, leading to speculation of a potential bullish rally. Nevertheless, one question remains in the minds of investors: how do you know when a bear market is over?
According to the rules established in traditional finance, a bear market begins when the value of an asset falls 20% from its recent highs, and ends when it rises 20% from its local lows. For example, the S&P 500 was declared out of its bear market about a month ago, meeting these conditions.
Applying these rules to cryptocurrencies, it appears that Bitcoin (BTC) would have ended its previous bear market in early January. Indeed, it broke above the $20,000 mark, after dropping below $16,500 following the FTX affair. Undeniably, the traditional definition of a bear market does not properly apply to cryptocurrencies.
A second method is to consider that Bitcoin is in a bear market when its annual returns are negative, and in a bull market when the opposite is true. According to this approach, Bitcoin may have ended its longest bear market in history on June 12, just days after the S&P 500. Again, the methodology doesn’t seem to be the best fit, although the time estimate is good.
So, in our previous analysis on Cryptoast, dated January 14, 2023, we proposed a third method:
The cryptocurrency market is in a bear market when the price of Bitcoin has fallen by more than 30% against its ATH and has been trading below this price level for more than 2 months. Conversely, a bear market ends – and a bull run begins – when the price of the asset is up 30% from its recent low and remains above this price for more than 2 months.
👉 Find this complete analysis – Bear Market vs Bull Run: will the Bitcoin halving be the trigger for the next bull run?
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Is the end of the bear market over?
During this study, and using this last definition, we estimated that the current bear market started on March 7, 2022. The lowest point for Bitcoin is $15,500 and was reached at the end of November 2022, almost 270 days of longevity. We highlighted that historically, the lowest points in the bear markets of 2014 and 2018 were respectively found in 287 days and 322 days.
Other information :
🟠 On average, the previous three bear markets ended 287 days before the Bitcoin halving.
🟠 The next halving will take place ~ March 17, 2024, which is ~430 days away.
This would mean an end to the bear market around May 25, 2023 👀
— Lilian – Cryptoast 🛸 (@LilianAliaga_) January 14, 2023
Considering that $15,500 was Bitcoin’s low point on this bear cycle, and according to the definition posed above: the bear market should end when Bitcoin climbs 30% from this bottom and settles more than two months above. In other words, it would take Bitcoin above $20,200 for more than two months. We estimated this date around May 25, 2023.
Looking back, what happened? In concrete terms, Bitcoin crossed $20,200 on January 14, 2023. Nevertheless, it plunged back below on March 9, before crossing it again on March 11 and never to return there again. Taking our definition into account, the 2022-2023 bear market would therefore have ended on June 11. Here is an analysis which corroborates with the second method of definition of a bear which, I remind you, gave us an end of the bear market on June 12th.
By this same means of calculation, the bear markets of 2014 and 2018 would have lasted 630 and 448 days respectively. With the calculation proposed above, the bear market of 2022-2023 would have lasted 461 days, which therefore does not make it the longest in history.
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