Why bear markets are less scary in each cycle

[d5000]

Well, would a newbie Bitcoin investor be put at ease by assuring him/her that the $1.2 trillion that Bitcoin lost in a matter of a few months is but a tiny amount in the US stock market? Would it make him/her realize that there's nothing to worry about, because the US stock market is a $70 trillion market when in the fact what's remaining in the Bitcoin market is just another $1.2 trillion?

I think either you look at it in relative terms (i.e. 50% of current market cap - it is scary, but not that scary if compared with other bears), or it's legit to compare it to other sources like the stock market. And it would also come down to ... when starts a bear market to be scary? If it loses 1T or more? Or are almost 1T like in 2021-22 also scary if it was almost 80% of the market cap back then?

Where I can agree is that these "trillion" numbers make good headlines for the media. Which can scare some away, but imo only the absolute noobs

You seem to be missing the fact that it takes a lot more effort to keep on pushing upwards - it takes trillions more capital invested in order to see substantial upwards movements.

To address a frequent misunderstanding: this difficulty to move upwards depends mainly on liquidity on the markets (more orders), not so much on the price itself.

In theory, thus, increased liquidity should protect both from excessive upward and downward movements. It looks at a first glance that moving it up is harder now while the panic + liquidation mix you mentioned still leads to quite harsh downward movements like the 90->60k crash in a few days in February. But also here: there were more substantial crashes before, even in 2021 it took very short from a 70k to a 30-35k level - and that twice.

People want stability so they suck money out of their riskiest assets and move them into more solid ones like bonds. We should be happy that the volatility is decreasing because it's likely to bring more investment and retail traders in.

I'm in the low volatilty camp too. Above all the volatility reduction should lead to a virtuous cycle, where more liquidity comes in, and also less hyper-speculative trading schemes would become more popular. That may lead also to a spike in leverage as we've seen it often in the last years, but if the spectacular profits from leverage become a thing of the past, then these practices could decline again in the next years.

[Darker45]

~snip~

I think either you look at it in relative terms (i.e. 50% of current market cap - it is scary, but not that scary if compared with other bears), or it's legit to compare it to other sources like the stock market. And it would also come down to ... when starts a bear market to be scary? If it loses 1T or more? Or are almost 1T like in 2021-22 also scary if it was almost 80% of the market cap back then?

Where I can agree is that these "trillion" numbers make good headlines for the media. Which can scare some away, but imo only the absolute noobs

Probably.

Regardless, perhaps we shouldn't just be looking at the numbers in terms of percentages. It must be important to ask how much these percentages translate into actual amounts.

As the Bitcoin market grows, there'll come a point at which we could no longer dismiss a correction by saying it's not worrisome yet because Bitcoin used to even correct 50%, 80%, 90% within a much shorter period.

It's when even 20% means a massive amount is leaving the market and many players might seriously wonder why. It's when the market is huge enough to achieve a certain level of stability. Also, it's when growth is also expected to slow down significantly.

[Emjay24]

Of course we can't roll back history, but it's nice to imagine that if Terra/Luna and FTX had better business practices, Bitcoin would already be an asset almost as stable as gold.

I find it hard to believe this since even the whales manipulate Bitcoin prices at will, we could see from last year how Trump actions triggered Bitcoin price to crash, it would've still happened even though FTX didn't crash back then. The thing is that Gold is more stable because of the government backing it and always projecting it as a valid backup asset since they exert direct control over it, if not for government involvement, gold would perform far worse than Bitcoin, you can see from silver which the government deliberately keeps the price low since they need to get a lot of it at cheaper prices to produce war equipments.

With all that being said, I still think Bitcoin could do even better. If the usage was less speculative and more about long term saving, the crashes would be even lighter. And we could approach gold volatility.

Sure, it can, but it would take a while for people to transition from the mindset of treating it as a speculative asset to a true investment asset which it truly represents.

[el kaka22]

While it is true that falls are getting smaller, that also means that the rises are getting smaller. Just like how we know that next bull run will not bring in 10x return, we also know that it will not take 90% out neither. Since we have grown too much, the idea that we are going to go up huge and go down huge is not there anymore and we should not be expecting something like that to be a possibility.

I understand it may feel like that's a possibility but it is not ,and that is why it is not going to happen that easily. we should just accept the fact that bitcoin is not as volatile as it sued to be, still more volatile than most other stuff in the world but at least not as volatile as bitcoin itself used to be.

[o48o]

You did not understand me.

Bitcoin did not fall because of Luna (now called Lunc) collapse, it was Lunc that collapsed because of bitcoin was falling. I was checking the market that time from time to time with minutes. That is the part I do not agree with.

Not denying the fact that bitcoin bearish sentiment had influenced the lunar crash because it was this general bearish sentiment that caused the depegging of lunar stable coin UST (Terra US) which had caused more minting of lunar then to help the stable coin and eventually lead to the collapse.

But the collapse or crash after this depegging was highly volatile that it created more panic in the market and created FUD then which made most people to panicked and sold off more. Most probably without this secondary panic from lunar or even FTX the dump wouldn’t have been heavy

I honestly don't think that any poorly designed altcoin protocol that gets exploited would affect to bitcoin's price. It's always other way around. When bitcoin bear starts, altcoin bear starts even worse. If UST depegging would have happened in the middle of the bitcoin bullrun season, it would have most likely only affected only altcoin prices. Or can you think of any other time in the history when altcoins would have triggered the bitcoin price?

If anything, all the altcoin drama underlines the bitcoin's status as nr1, and probably leads more ex alt coiners trusting in that as unexploited one.

[d5000]

It's when even 20% means a massive amount is leaving the market and many players might seriously wonder why.

Thing is that this amount is not really leaving the market. It's the ficticious value of market capitalization which gets down by this amount.

This is not the same thing as you can see in a very popular example with an altcoin:

We have a premined token which just enters the market, with 1 million units. A buyer buys one of this tokens for 1$ each. The market cap explodes to 1 million. Then the buyer sells it but for 10 cents. He has lost 90 cents which is the money which really "left the market" because there were no other buyers and sellers. But the market cap crashes to $100,000 - according to that change, 900,000$ "have left the market"!

In the case of Bitcoin we have no premined tokens, but we have Satoshi's coins and a lot of early adopters' coins which were "valuated" the last time 10 years or more ago, i.e. there is a quite big percentage of the coins that never were moved for more than a little fraction of the current price. But for market cap, they count as if they were bought at $75000+ and not mined on a laptop for $0,01 or so per unit.

So if any media outlet came up with something like "1 trillion USD were destroyed in the Bitcoin crash", I would dismiss it outright as FUD. And yes, there is a huge volume on exchanges currently, but many coins are simply moved back and forth from one trader on the same CEX to another one according to their strategies, i.e. some coins change their owner frequently while a lot of coins are not really available at the markets at all.

I find it hard to believe this since even the whales manipulate Bitcoin prices at will, we could see from last year how Trump actions triggered Bitcoin price to crash, it would've still happened even though FTX didn't crash back then.

There's no evidence for that. It may have happened, or it may have not. All what I was saying is that there was a probability (for me, higher than 50%) that the 2022 crash would have been significantly (i.e. 10 percentage points or more) less deep if Terra/Luna and FTX didn't happen. We will never know this but for me it's valid to try to evaluate the influence of crypto firm bankruptcies - because they erode trust in Bitcoin and the crypto sector, at least for some weeks, and they also are good "food" for shorters trying to capitalize from the resulting panic sales.

The thing is that Gold is more stable because of the government backing it and always projecting it as a valid backup asset since they exert direct control over it, if not for government involvement, gold would perform far worse than Bitcoin, you can see from silver which the government deliberately keeps the price low since they need to get a lot of it at cheaper prices to produce war equipments.

I don't know if what you say about silver is true, that is speculative imo. But I agree that the gold "dormant" at central banks is indeed a major factor to contribute to gold's stability.

[dansus021]

Well to be honest and from the deepst of my heart I would prefer bitcoin with less volatile bear market and not bigger ATH,  i mean harsh bitcoin price like it used too is not for everybody, some people didnt want to try bitcoin because the drawdown is scary my family member and my friend usually didnt want to invest because of this. I mean the volatile of bitcoin price is the key element of crypto haha HIGH RISK HIGH REWARD for most of the people stock is volatile but hey Crypto is another level.

To do Bitcoin reached another ATH means they need more investor buying it push marketcap at trillion USD level is hard than it looks. One things that I dont like at the current market is there is no altseason because while you think bitcoin can go up and down 30% in a day altcoin can double it haha and altseason is the party time.

[tabas]

This is what I have also observed and if there will be friends of mine try to ask me if it's still worth it to buy bitcoin after all of these all time highs, this is a good comparison to show to them. Because looking at the lows, we're having better lows each cycle that passes by. Others might see it as something negative but they have to understand that each lows that we're having per cycle is actually better than the ones in the past. Soon, the high that we've got last 2026 will be just another low for the next cycles in the future.

Exactly, the low is getting better. Take for instance, the ATH high after the 2017 bullish year was $19k and the Lowest low in 2022 was $15k meaning even if you have actually invested at higher price (2017 ATH) and held properly you would still be at a reasonable lower price. Same with $69k low too. Now we are at $75k plus which is higher than that. So technically holding for full cycle (4 years) means that there is higher probability that no matter the condition of the market the price might be higher than the lowest low in that period.

Yes, it's getting better and those who have bought it on the past peaks might break even already. But it's kind of disgusting for them to wait that long just for them to recover and break even. Yet, for those who have been stead fast and patient there's a reward for them. We'll see if this year is going to be less scarier than the past because that's how the cycle goes and what data shows us.

So while the best time to invest into bitcoin is yesterday, the next best time is today

And they shouldn't miss doing that today.

[TheUltraElite]

I think as an asset buyers are seeing the ATH and now the Lows.

So 126k$ as an ATH is pretty attractive for any new investor in this sector, provided they are getting a price of as low as 50k$ to buy at, assuming a bad bear market and price crashes to that 50k level and stays at that level.

What I am rather concerned with is the duration of the bear markets being prolonged, which I have seen previously as well, common trend in bitcoin market.

[joniboini]

What I am rather concerned with is the duration of the bear markets being prolonged, which I have seen previously as well, common trend in bitcoin market.

Wouldn't that give more time to average lower if you enter at a slightly higher price though? I guess some enthusiasm will wane if it continues for long, but I don't think the market will react negatively to that. Especially if the majority of traders believe in the so-called 4-year cycle or something similar. I can understand if you don't have enough capital and you bought at the top, which means you need to see your investment stays at -50% or even lower.

[RumorCipher]

Bitcoin's volatility is declining and Bitcoin is slowly becoming a more stable and reliable asset.

But some observers (including me) have spotted a possible problem: It seems that mainly the bull markets are becoming weaker, while bear markets seem almost as harsh as ever.

For example, if we think 126k was the top of the last bull market, then this would be a 80% increase from the 2021 high (70k). The 2021 high, in contrast, had more than tripled the 2017 high of 20k. While the last bear markets fell consistently by more than 75%, compared with the previous ATH. (Well, if 60k hold in this cycle, then this bear would have significantly weaker with -53%.)

In other words: Upside volatility seems to decline faster than downside volatility. I have wondered if this is a warning sign. Could we get into a situation where it becomes harder and harder to reach an ATH, but we still every couple of years we see a ~70-80% crash? And could that make Bitcoin unattractive as an asset?

But I've thought again about it, and I found some reasons why it might be less of a problem than I thought initially.

Reason 1: Lows preserved an increasingly higher percentage of the ATH price.

The fall from high to low looks scary in all bear markets: The 2011 bear fell by 93% (32 to 2$), the 2014 bear by 88% (1200 to 135), the 2018 bear by 85% (20000 to 3000) and the 2022 bear by 77% (70000 to 15500).

But if we look the other way around we see: The 2011 low was only 7% of the high, but it increased to 12% (2014/15), 15% (2018) and 23% (2022). If we compare the percentages, it means a constant increase by more than 20% in each cycle, the 2018-2022 increase was strongest with an increase over 50%.

The crashes look far more scary due to psychology. And the next reason confirms that positive trend ...

Reason 2: The lows are increasing faster than the highs.

Also if we look at the evolution of the "cycle lows" we see an encouraging trend: $2 (2011) - $135 (2015) - $3000 (2018) - $15500 (2022). The 2022 low was more than 5 times higher than the 2018 low! The ATH to ATH comparison instead yielded lower values both for 2017-21 (3 times) and 2021-25 (1.8 times).

The result is quite bullish and surprising: Lows are increasing faster than the highs. This means also that if you invested close to the low, you always got a good profit even if you were so terribly unlucky to sell exactly at the next low. Good news for contrarian investors and dip fishers.

Reason 3: The last big crash in 2022 had specific reasons: Terra/Luna and FTX.

It is very likely that these two events triggered a lot of panic sales. Before Terra/Luna the low was at around $30000. That would have been a 55% crash, a notable improvement over the 80% crashes previously recorded. And after Terra/Luna but before FTX, the low was $20000. Still a noticeable improvement (70% crash). Only the FTX crash brought the depth close to 80% again.

Of course we can't roll back history, but it's nice to imagine that if Terra/Luna and FTX had better business practices, Bitcoin would already be an asset almost as stable as gold.


With all that being said, I still think Bitcoin could do even better. If the usage was less speculative and more about long term saving, the crashes would be even lighter. And we could approach gold volatility.

Bear markets feel less scary now because Bitcoin is maturing. It still drops hard, but each cycle the lows are much higher than before, so long-term holders are still in profit. Also, some big crashes (like 2022) were made worse by events like TerraUSD and FTX collapsing. So even if the upside is slower now, the foundation is getting stronger, which makes each bear market feel less scary over time.

[snowpega]

I don't know, this one has been really scary.
I mean the 10th of October 2025 was probably the scariest day i've ever witnessed in crypto, given that unlike with Covid global derisk or with FTX collapse, there wasn't literally ANY reason for that price action. Not as much for Bitcoin of course, but many even large altcoins went to 0 on Binance that day.

What are you talking about here? I mean, which crypto event are you talking about that you witnessed the most scariest day ever in this space?
I have been in the crypto space since 2022, and now it's been almost four years now but honestly, I don't remember the event you are talking about in your post that happened on the 10th of October 2025. Maybe that is the meaning.

I am getting old because I don't remember the event you are talking about.
Haha, just kidding, I am not that old, but still, why don't I remember that event?
You know what surprised me most, is that when you said that most of the altcoins went to zero on Binance on that day, so surely it was something too bad. Would you like to tell me what are you talking about? Thanks!

[Fiatless]

I don't know, this one has been really scary.
I mean the 10th of October 2025 was probably the scariest day i've ever witnessed in crypto, given that unlike with Covid global derisk or with FTX collapse, there wasn't literally ANY reason for that price action. Not as much for Bitcoin of course, but many even large altcoins went to 0 on Binance that day.

What are you talking about here? I mean, which crypto event are you talking about that you witnessed the most scariest day ever in this space?
I have been in the crypto space since 2022, and now it's been almost four years now but honestly, I don't remember the event you are talking about in your post that happened on the 10th of October 2025. Maybe that is the meaning.

I am getting old because I don't remember the event you are talking about.
Haha, just kidding, I am not that old, but still, why don't I remember that event?
You know what surprised me most, is that when you said that most of the altcoins went to zero on Binance on that day, so surely it was something too bad. Would you like to tell me what are you talking about? Thanks!

Just did a fast search of what happed that they and discovered that Bitcoin dropped from $126,000 to below $108,000. This is not the biggest dip it has had, but it was also significant since it is one of the largest market crashes in history.

Over $19 billion in leveraged positions was liquidated in a single day, marking one of the largest market crashes in history, alongside massive drops in altcoins and a $400 billion reduction in total market cap.

https://www.binance.com/en/square/post/31014323827425

I guess sergiorus invested in some altcoins that went to zero, which led to a total loss. This is why it is safer to buy only reputable crypto like Bitcoin. No matter how the market dropped, Bitcoin would never get to zero.

[WillyAp]

To do Bitcoin reached another ATH means they need more investor buying it push marketcap at trillion USD level is hard than it looks. One things that I dont like at the current market is there is no altseason because while you think bitcoin can go up and down 30% in a day altcoin can double it haha and altseason is the party time.

they need to be scared enough about all other safe options.
The last escape to save some money.

[Altryist]

 As Bitcoin's market capitalization grows, it will become an increasingly heavy and less volatile asset. In this case, its volatility will decrease in both directions, perhaps even a new black swan event in the market won't impact Bitcoin as much as it did before. But on the other hand, Bitcoin dropped to 60,000 without any significant negative news, there was just a lot of selling that put pressure on the price. I don't think we've reached the bottom of this bear market yet, but I think we could be close.

[KiaKia]

It's why I like every bear market, if you have good way of keeping track you will get in at very good time and good opportunities, people will fear away, because they will believe we are going down but once we start going side ways for long, that's a calling to answer.

It also gives enough time for gathering some money to buy, there is zero fomo in the market, and bear market always take longer too, from 300 days or more to even 500days or more, we all read charts differently but those who knows how to read chart knows what I am saying.

Enough room for people who also want to DCA every week or monthly, there is no excuse for anyone about missing the target unless you hunting for the very bottom and most of the time you will miss it.

[d5000]

Wouldn't that give more time to average lower if you enter at a slightly higher price though? I guess some enthusiasm will wane if it continues for long, but I don't think the market will react negatively to that. Especially if the majority of traders believe in the so-called 4-year cycle or something similar.

Overall I agree that it would be an opportunity. But just the "cyclists" would eventually become the problem in that scenario.

Part of the "cycle theory" is that the bear markets do never extend to close to the next halving, and thus more than 2 years would become already dangerously close to the "rebuttal" of the cycle concept.

Of course if there are other data giving hope, like increased adoption, then it can revert at any time. But I can also see some scary scenarios playing out, where many people would panic sell and the bear market would get deeper and deeper. These scenarios however are reversible, and their likelihood is probably very low. If we (Bitcoiners) don't miss something ...

[dansus021]

—snip—

they need to be scared enough about all other safe options.
The last escape to save some money.

at this point I just need altseason like it used to haha you buy random coin and can double in the next week. But do you think that this current bear market is less scary? Just yesterday after powell no longer the chairman of the fed bitcoin just up and down like crazy, the US didnt cut the interest rate it should be pumped somehow.

How to make people scared enough

[JaanusRaim]

Bitcoin's volatility is declining and Bitcoin is slowly becoming a more stable and reliable asset.

But some observers (including me) have spotted a possible problem: It seems that mainly the bull markets are becoming weaker, while bear markets seem almost as harsh as ever.

For example, if we think 126k was the top of the last bull market, then this would be a 80% increase from the 2021 high (70k). The 2021 high, in contrast, had more than tripled the 2017 high of 20k. While the last bear markets fell consistently by more than 75%, compared with the previous ATH. (Well, if 60k hold in this cycle, then this bear would have significantly weaker with -53%.)

In other words: Upside volatility seems to decline faster than downside volatility. I have wondered if this is a warning sign. Could we get into a situation where it becomes harder and harder to reach an ATH, but we still every couple of years we see a ~70-80% crash? And could that make Bitcoin unattractive as an asset?

But I've thought again about it, and I found some reasons why it might be less of a problem than I thought initially.

Reason 1: Lows preserved an increasingly higher percentage of the ATH price.

The fall from high to low looks scary in all bear markets: The 2011 bear fell by 93% (32 to 2$), the 2014 bear by 88% (1200 to 135), the 2018 bear by 85% (20000 to 3000) and the 2022 bear by 77% (70000 to 15500).

But if we look the other way around we see: The 2011 low was only 7% of the high, but it increased to 12% (2014/15), 15% (2018) and 23% (2022). If we compare the percentages, it means a constant increase by more than 20% in each cycle, the 2018-2022 increase was strongest with an increase over 50%.

The crashes look far more scary due to psychology. And the next reason confirms that positive trend ...

Reason 2: The lows are increasing faster than the highs.

Also if we look at the evolution of the "cycle lows" we see an encouraging trend: $2 (2011) - $135 (2015) - $3000 (2018) - $15500 (2022). The 2022 low was more than 5 times higher than the 2018 low! The ATH to ATH comparison instead yielded lower values both for 2017-21 (3 times) and 2021-25 (1.8 times).

The result is quite bullish and surprising: Lows are increasing faster than the highs. This means also that if you invested close to the low, you always got a good profit even if you were so terribly unlucky to sell exactly at the next low. Good news for contrarian investors and dip fishers.

Reason 3: The last big crash in 2022 had specific reasons: Terra/Luna and FTX.

It is very likely that these two events triggered a lot of panic sales. Before Terra/Luna the low was at around $30000. That would have been a 55% crash, a notable improvement over the 80% crashes previously recorded. And after Terra/Luna but before FTX, the low was $20000. Still a noticeable improvement (70% crash). Only the FTX crash brought the depth close to 80% again.

Of course we can't roll back history, but it's nice to imagine that if Terra/Luna and FTX had better business practices, Bitcoin would already be an asset almost as stable as gold.


With all that being said, I still think Bitcoin could do even better. If the usage was less speculative and more about long term saving, the crashes would be even lighter. And we could approach gold volatility.

Very interesting thread! Lovely numbers.

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

Bitcoin price increases in the period 03/01/2009 - 31/12/2017 (108 months) 14 000 000x (from 0.001 usd to 14 156 usd)
Bitcoin price increases in the period 01/01/2018 - 01/05/2026 (100 months) 5.53x (from 14 156 usd to 78 327 usd)

For vast majority of altcoins the difference between these two episodes even bigger. In the second episode (2018-2026) most altcoins are only fallen and fallen and 2018-2026 total result is significantly negative. In the first episode (2009-2017) almost all altcoin showed a great increases. But the 2017 "first altcoin revolution" clearly failed and therefore in the second episode the dominant narrative is that altcoins are spam and "pump and dump" but only Bitcoin is real asset.
The Bitcoin price increases in the second episode (5.53x in 8,333 years that makes less than 20% per year) is a normally good investment return for mature asset like gold, silver or major stock indexes.

The difference between these two periods (2009-2017 and 2018-2026) is so huge that we can not treat Bitcoin as the same thing, the same asset. New thing - new rules. The time series from the years 2009-2017 are useless nowadays.

To analyse the Bitcoin from 2009 to 2026 is as absurd as to analyse the working of the engine of a car when it moves and when it stands (and not taking account the difference of these two states) 

[AgriTrack]

To address a frequent misunderstanding: this difficulty to move upwards depends mainly on liquidity on the markets (more orders), not so much on the price itself.

In theory, thus, increased liquidity should protect both from excessive upward and downward movements. It looks at a first glance that moving it up is harder now while the panic + liquidation mix you mentioned still leads to quite harsh downward movements like the 90->60k crash in a few days in February. But also here: there were more substantial crashes before, even in 2021 it took very short from a 70k to a 30-35k level - and that twice.

Whenever the economy and market decline, people fear that their capital will sink and everything will end because they have seen these situations before. 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 increases people's confidence because they believe that this difficult time will end soon. If a new person sees the market falling, he will be worried about it, but someone who has seen this thing repeatedly becomes accustomed to it. Every time the market declines, people are less afraid now. The world is not considered to end due to a decline in the market. It gives courage to a person and makes a person mature. Due to this, a person is not afraid of difficult decisions in life because he has faced all these things.