Following a “to the moon” bull run in late 2017, Bitcoin and its ilk got caught up in the treacherous swamps of a bear market in 2018, one that does not seem to near its end, despite almost weekly proclamations to the contrary from various crypto talking heads.
Indeed, the bears are apparently here to stay, and despite occasional resistance from the ever more beleaguered bulls, they continue pushing the price of BTC lower and lower — not to mention that of the other cryptocurrencies.
Are the bears destined to win this one for good? Are the days of BTC in particular and the cryptocurrency industry in general, numbered?
Doom and gloom is no stranger to this extremely volatile vertical, which — according to many — is the herald of a future built almost entirely on blockchain technology.
If the future is so bright though, why are we even considering the possibility of the demise of these currencies? Could it be because such an outcome continues to be in the package? Mainly yes. Despite crypto’s history proving it otherwise, many continue to believe that with these currencies, we’re dealing with nothing more than a prolonged, multi-peak bubble, which will eventually inevitably collapse.
Since there’s no reliable way to peer into the future, to even attempt to predict the direction in which the crypto industry may head in this prolonged bear market, our best bet is to take a look at the past.
As said, BTC and crypto, in general, did go through bear markets in the past. In fact, historically speaking, this latest stretch of woes is not even the worst cyptocurrencies have seen.
In December 2013, the price of Bitcoin reached a peak of $1,236, an ATH (All-time High) at that time. The “accomplishment” was followed by an extended bear market though, in a manner similar to the drop from last December’s ATH. The losses logged during that period of bear dominance were much more substantial than the ones registered now though.
On June 1, 2015, the price of a BTC was $225, meaning the realized losses were in the neighborhood of 81%.
The current bull market has thus far seen the price dive from an ATH of $19,600 to around $5.7k, meaning that the losses registered never exceeded the 71% mark. Considering that since the above said low, the price has already rebounded somewhat, and that the December ATH only lasted for a couple of days, it is safe to assume that there were very few traders who actually hit the 71% mark loss-wise.
The obvious question here on everyone’s mind is: have the prices really found a bottom yet? Is a long-term term bullish reversal already in its incipient stages?
If it is, we’re definitely seeing a pattern emerge here, of a series of bull runs, which result in ever higher highs and ever higher lows, over the years.
If this pattern does indeed turn out to be a valid one, we’re likely to see a bull run sometime in the future, that will take the price of BTC close to the $200k mark.
Of course, there are notorious Bitcoin bulls out there, who call for future highs in the millions of dollars, based on various models and reasoning, and whose predictions are quite wildly optimistic. For now though, a convincing bottom/end to this bear market is needed to lend more credibility and sturdiness to the markets.
In this regard, there are several factors to consider. According to some, at this point only a BTC ETF approval from the SEC could “save” Bitcoin and its ilk. While the idea itself behind such reasoning, makes perfect sense, put this way, the premise itself does not…
An ETF will allow institutional investors to legally invest in cryptos (more precisely BTC) while enjoying legal protection and guarantees. This is in essence the main appeal of an ETF — this is why it is expected to prompt a massive influx of institutional money into the mix, getting mutual funds and pension products onboard too.
While the impact of an eventual approval by the SEC of a proposal like this would be without a doubt massive, one doesn’t actually have to wait for an ETF approval to open up those institutional avenues.
The ICE’s Bakkt is set to accomplish the same come November, so that’s definitely a date to watch. Bakkt is a regulated, physical BTC warehouse and futures contract, which will allow investors of the above-depicted caliber to jump right into the crypto markets.
In addition to that, there are a few other ETF proposals on the table too, sturdier than the ones already rejected by the SEC, pushed by more serious actors. An eventual ETF approval is widely expected to come about in 2019.
The bottom line is, that at this point, the complete demise of BTC and the crypto markets is not very likely. When will the current bear market end then? The 2014 one, with which we drew a parallel above, lasted for about a year and a half. This one may last as much too, though the above factors taken into consideration, it is likely to come to an end sooner…