Why bear markets are less scary in each cycle

[d5000]

Have you considered dividing  the whole period 2009-2026 into two episodes 2009-2017 and 2018-2026 ?

I'd definitely say there were at least two different periods, even if I'd put the cut between 2016 and 2017, or choose some date in early 2017 (for example the futures approval), because 2017 was the year of the first real massification of Bitcoin and cryptocurrencies in general (first futures, altcoin ICO craze etc.). 2018 was the aftermath of that bull market so it makes no sense to put the cut between 2017 and 2018.

I'd also cut off the first year. There was no real market back then. More cuts could be done between pre and post mid-2014 (MtGox period and post-MtGox) and pre and post late 2020 (Tesla involvement) and even in 2024 (US ETFs). And of cours I'd analyze the yearly averages, to flatten the volatility spikes.

But in general this doesn't change that much of the interpretation. 2017-18 was still a stronger bear market than 2021-22. And the 2017 bull was still much stronger than the 2021 bull.

There could be two ways to interpret this:

- buyers start to accumulate earlier in the bear market (anticipation) and this leads to higher lows.
- sellers do not panic that much anymore, only in periods of strong insecurity (the current Iran situation/recession fears) or Bitcoin-specific bad news (Terra/Luna, FTX, China ban -50% crash in 2021). In contrast to that the 2018 crash was purely panic-driven, probably due to an exhaustion of the bull fueled by new retailer capital which had flown in in 2017, thus this might have been the last classic "weak hands" crash (another reason for the 2020 cut I mentioned above).

Both reasons are bullish and would be a strong foundation for a 60k bottom or at least a yearly low close to 50k at most which is of course still possible.

But they are comforted by the fact that this market has fluctuated many times and later the market will recover twice. Therefore, people are less afraid now because they have already experienced it.

This can indeed be a reason and the cause for the two phenomenons I mentioned above (earlier accumulation, less panic). A textbook maturing of the Bitcoin market.

[Uhwuchukwu53]

The truth is that what one have tested and seen result automatically killed fears because result has already been known, many investor who has been in the market for long now, with knowledge has nothing to shake or fear because alot of experience has been gathered, what they consider most is the time frame to which it will last based on their target, remember long time holder don't worry even as most person consider it more advantageous to accumulate more, is mostly newbies that worry about bear market and daily traders.

[tiCeR]

Have you considered dividing  the whole period 2009-2026 into two episodes 2009-2017 and 2018-2026 ?

I'd definitely say there were at least two different periods, even if I'd put the cut between 2016 and 2017, or choose some date in early 2017 (for example the futures approval), because 2017 was the year of the first real massification of Bitcoin and cryptocurrencies in general (first futures, altcoin ICO craze etc.). 2018 was the aftermath of that bull market so it makes no sense to put the cut between 2017 and 2018.

I'd also cut off the first year. There was no real market back then. More cuts could be done between pre and post mid-2014 (MtGox period and post-MtGox) and pre and post late 2020 (Tesla involvement) and even in 2024 (US ETFs). And of cours I'd analyze the yearly averages, to flatten the volatility spikes.

But in general this doesn't change that much of the interpretation. 2017-18 was still a stronger bear market than 2021-22. And the 2017 bull was still much stronger than the 2021 bull.

There could be two ways to interpret this:

- buyers start to accumulate earlier in the bear market (anticipation) and this leads to higher lows.
- sellers do not panic that much anymore, only in periods of strong insecurity (the current Iran situation/recession fears) or Bitcoin-specific bad news (Terra/Luna, FTX, China ban -50% crash in 2021). In contrast to that the 2018 crash was purely panic-driven, probably due to an exhaustion of the bull fueled by new retailer capital which had flown in in 2017, thus this might have been the last classic "weak hands" crash (another reason for the 2020 cut I mentioned above).

Both reasons are bullish and would be a strong foundation for a 60k bottom or at least a yearly low close to 50k at most which is of course still possible.

But they are comforted by the fact that this market has fluctuated many times and later the market will recover twice. Therefore, people are less afraid now because they have already experienced it.

This can indeed be a reason and the cause for the two phenomenons I mentioned above (earlier accumulation, less panic). A textbook maturing of the Bitcoin market.

There could be even more ways to interpret this and most of them are pretty straightforward I think. Bitcoin has stood the test of time and there are now probably more people involved with bitcoin who also have a somewhat longer history with bitcoin. It is not very new hands in there who get shaken quickly. You've got more investors who have far more financial endurance, which means there is supposedly less downward dynamic possible. That doesn't mean it is impossible, but especially the dump in end 2017/18 has proven that there were so many retail traders who literally shit their pants and then sold at whatever they could get.

Another factor was how diluted. the market was, or the ecosystem in general. When one alt coin after the other died within hours because liquidity disappeared, holders tried to get out of their alt, mostly into ethereum then and from their cut losses. It was the perfect storm to pull down everything. It was usually this altcoin x > ethereum > bitcoin > dump for fiat and cry. It depended on which exchanges traders were using, but in many cases that was their exit route an ethereum was far more volatile than bitcoin, therefore almost everyone dumped ethereum and was extremely concerned and sensitive to price movements in bitcoin, too. That is why it really ended in a slaughtering no matter which crypto you looked at back then.

I think this has changed because many big and institutional investors are less likely to move their holdings when bitcoin goes down or up 20%. Back then there were far more people (relative to big holders I suspect) who could contribute to that dump.

With time passing by and less of this crazy hype speculation talk and reporting in public, I think there are more holders now who have made a rather strong decision to get in and stay for a while. In 2017 you had to act fast and couldn't make up your mind first for months or look back at a solid decade of global bitcoin trading. All that has changed and makes it less likely to see another 70% dump.

[Inwestour]

When you say that each new bear market becomes less scary, it may also be connected to the fact that you become more experienced with cryptocurrency and understand better what to expect in the future. If we compare previous bear markets, we can see that Bitcoin’s declines are becoming smaller, but usually only by several percentage points. So for new people investing in Bitcoin or other coins, the drop can still feel very significant, and the bear market may be devastating for them. But for you, as an experienced participant, it may already feel much less painful.

[d5000]

It was usually this altcoin x > ethereum > bitcoin > dump for fiat and cry.

Indeed that's an interesting point which was seldom brought up until now. One can say Bitcoin in 2018 thus took a part of the volatility from alts because you couldn't invest in alts directly that easily. That is no longer the case as in most exchanges now you can dump at least into USDT, if not directly to fiat, and if you invested in exotic tokens you have the route token -> ETH/Solana/whatever -> fiat/stablecoin.

However that didn't only occur to the downside: People also had to buy their altcoins via Bitcoin mostly (with the exception of ICOs which could be paid with fiat, although I think this method wasn't very common back then, most were bought via ETH or BTC). So it's possible that a part of the 2017 bull run could also be attributed to altcoins. Bitcoiners profited from them ... and then suffered the downside volatility.

I think this has changed because many big and institutional investors are less likely to move their holdings when bitcoin goes down or up 20%. Back then there were far more people (relative to big holders I suspect) who could contribute to that dump.

I think the fact that many of the new holders are institutional contributes, but it adds volatility to both sides too. The possibility to trade ETFs with the liquidity of a real stock exchange could have added to the extreme forms of leveraged trading we're seeing in the last years, which contributed for example to the 30% dump in a few days between 90k and 60k, as well as the previous dump from 120k to 100k.

I think there are more holders now who have made a rather strong decision to get in and stay for a while.

IMO what matters is the goal to participate from the longer term price increase (which still is excellent) and that can be seen largely independent from the character of the investor (institutional or retailer). The DCA method for example was not very popular in 2017 still as far as I remember. Of course there are still the classic "bull market riders", but many of them try to not sell everything at the top or in the first stages of the bear market, but instead only take profits with a part of their holdings.

If 60k was indeed the 2026 low, or we see another low but it stays above or close to the 50k mark (and thus to the 2024 lows), that behaviour could be strenghtened. In the 2014 and 2018 bears, those who sold for 60% of the ATH price still could re-buy at 25-30% or even lower enabling them to double their BTC even if they missed the top by a large margin. But if 45-50% of the ATH price is already the bottom then this behaviour is not really rewarded anymore. We still have to see how this bear market plays out, though. Everything is possible I feel.