Rethinking Bears
Bull markets author the bear that follows. With this as our guiding principle, let's explore how a modern Bitcoin bear may not look quite like those we've encountered in prior cycles.
G’day Folks,
This cycle is different, but it is also very much the same. Some of the key topics which make this cycle different to prior ones:
The launch of the ETFs (which are the most successful ever).
The entry of serious institutional investors and capital.
The emergence of Bitcoin as a political asset of interest.
The widening divergence between Bitcoin, and crypto, where the orange coin appears to have crossed the Rubicon of wider acceptance. Crypto on the other hand continues to struggle working out what the product-market-fit is.
However, there are many elements which are the same, ranging from the stark similarities to the 2016-17 cycle, price performance since FTX, and of course, our emotional response to fear and greed.
There is no shortage of speculation about whether this cycle will be different in the bull. There always is.
What not enough people are talking about is how things might be different in the bear market, which will eventually come out of hibernation.
The bull market will author the bear that follows.
This is my core summary of how I think about what could happen. Prior bears have seen maximum drawdowns of more than -76%. Imagine if we have already set the top at $109k…that would take price down to $26k…which I don’t believe any of us think is a probable outcome.
What if price ripped to $150k?…Bottom would be $36k, still not likely in my view.
In this piece, I want to take you on a journey through how I have arrived at my conclusion for where a bear market floor might form.
It will involve an exploration of the obscure onchain metric of Coinday Destruction, Cointime Economics, and a bet that I lost back in 2022…
Let’s go.
📈 Reminder: you can find the charts from our articles on the Checkonchain Charting Website, and a guide in our Charts Tutorial Video.
Premium Members will find the TL:DR summary, video update and the rest of the written post below. Consider upgrading to premium today to unlock the rest of the content!