Bitcoin Investors, Here’s the 5 Phases of a Crypto Bear Market We Are Experiencing
During the last months, virtual currencies have been in a bear market that drove the prices of virtual currencies to yearly lows. Indeed, some virtual currencies lost more than 90% of their value. And cryptocurrency hodlers have been suffering the consequences of this strategy.
These are the 5 Stages that Bear Markets Experience
- The first stage of a bear market is a denial about the current state of the market. If an asset started to grow exponentially and it suddenly drops, users will continue to believe that the market will continue to grow. However, technical indicators show that this is just the beginning.
In Bitcoin, the denial after the bull run that took it up to $20,000 was experienced in January 2018 when Bitcoin was again being traded close to $18,000 dollars. However, these price levels were unsustainable.
- The second stage of a bear market is related to anger. Users will see their funds drop and lose their value day after day, hour after hour in some cases. Hodlers can only get angry about this situation. However, the hodler does not sell his assets.
This stage can be seen in Bitcoin in February 2918. Bitcoin lost 65% of its value in just a few weeks but there were users believing that the bear market was close to an end.
- After reaching new lows in several months, the market corrects upwards. Investors believe that the market bottomed and that the bull run starts again. However, this is not the case. A holder will be waiting for new highs, but the reality is completely different. Bitcoin experienced this situation between March and May of the current year. Bitcoin spiked up to $11,000 dollars but it could not sustain the gains.
This is known as the bargaining stage. Investors tend to buy more virtual currencies being sure that they do not miss the bull run once again.
- The fourth stage of a bear market comes with depression. Users realize that selling at the bottom and buying at the top is not the best strategy to follow. It was much easier when the market was growing at all times as in the bull run period. In July, the cryptocurrency market entered a generalized depression stage in which Bitcoin reach 7-month lows and the chances to recover seemed quite low.
- Finally, the last stage is to accept the situation. Investors need to accept that they are experiencing a bear market and not a bull run. Clearly, it is sometimes complicated. Bitcoin grew during all 2017 and 2018 was totally different.
During bear market, users realize that there are several interesting projects that are worth to investigate and invest in rather than just speculating with the price of the most important virtual currencies. At the moment, most of the traders are not expecting a bull run in the near future, and indeed, Bitcoin has been very stable in the last few weeks.