Is Bitcoin (BTC) still in a 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 25 May 2023. Considering the recent bullish rebound experienced by the cryptocurrency market, let’s revisit this study together and finally answer this question.
Bear Market vs Bull Run
It’s no secret that Bitcoin (BTC) has been experiencing a long period of negative annual returns, leading to speculation of a potential bull run. However, one question still lingers in investors’ minds: 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 by 20% from its recent highs, and ends when it rises by 20% from its local lows. As an 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. In fact, it passed the $20,000 mark, after dropping below $16,500 in the wake of the FTX affair. Clearly, the traditional definition of a bear market does not apply properly to cryptocurrencies.
A second method is to consider Bitcoin to be 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 would have ended its longest bear market in history on 12 June, just a few days after the S&P 500. Once again, the methodology does not seem to be the most suitable, although the time estimate is good.
For example, in our previous analysis of TCN, dated 14 January 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% relative to 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 that price for more than 2 months.
Is the end of the bear market behind us?
In the course of this study, and using the latter definition, we estimated that the current bear market started on 7 March 2022. The lowest point for Bitcoin is $15,500 and was reached at the end of November 2022, or almost 270 days of longevity. We highlighted that historically, the bear market lows of 2014 and 2018 were found in 287 days and 322 days respectively.
Other information:
On average, the previous three bear markets ended 287 days before Bitcoin halved.
The next halving will ~ take place on 17 March 2024, ~ 430 days from now.
This would mean an end to the bear market around 25 May 2023
– Lilian – Cryptoast (@LilianAliaga_) January 14, 2023
Considering that $15,500 was Bitcoin’s low point in this down cycle, and according to the definition above: the bear market should end when Bitcoin climbs 30% from this low and settles more than two months above it. In other words, Bitcoin would have to exceed $20,200 for more than two months. We estimated this date at around 25 May 2023.
With hindsight, what happened? In concrete terms, Bitcoin exceeded $20,200 on 14 January 2023. However, it fell back below that mark on 9 March, before crossing it again on 11 March and never going back. Given our definition, the bear market of 2022-2023 would therefore have ended on 11 June. This analysis is consistent with the second method of defining a bear, which, I would remind you, gave us an end to the bear market on 12 June.
Using the same calculation method, the 2014 and 2018 bear markets would have lasted 630 and 448 days respectively. Using the calculation proposed above, the 2022-2023 bear market would have lasted 461 days, which does not make it the longest in history.
