Grayscale Investment’s newest Insight study offers fascinating food for thought, anchoring the current bear market’s commencement in June 2022, which may endure another 250 days if prior market cycles repeat themselves.
Findings of Grayscale
Grayscale describes that the cryptocurrency markets are dealing with market cycles. The market cycles of the main cryptocurrency, Bitcoin (BTC), typically span four years or 1,275 days. Grayscale defines a cycle as when the realized price of BTC falls below the current market price.
This realized price is determined by the total of all assets divided by the market capitalization of the (digital) asset.
This metric indicates how often positions are lucrative, assuming they are profitable. By June 13 of this year, BTC’s realized price had fallen below the market price, indicating the start of the current bear market, according to Grayscale.
If market cycles recur, it might take another 250 days from July, according to the company.
Looking at the History
Grayscale traces the market cycle from 2012 to 2015, highlighting events such as the emergence and fall of the dark web marketplace Silk Road and the infamous Mt. Gox crisis, which resulted in the first big bear market. The growth of Ethereum, major exchanges, and wallet providers resulted in a slow ascent to the market’s next highs.
The period from 2016 to 2019 will be recognized for the surge of initial coin offerings enabled by Ethereum’s smart contract technology. Much of the cash that poured into the cryptocurrency ecosystem in late 2017 was expelled the following year when the second big bear market began.
The market cycle of 2020 will be regarded as a tale of leverage. Grayscale observes that during the Covid-19 epidemic, investors were tempted to leverage trade with increasing government investment.
