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.

[tiCeR]

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.

Yes it was definitely both upside and downside, but during a bullrun you often have tons of liquidity flowing into the market and some resistance because some people will take profits, in particular during a bullrun like in 2017. I held some ERC-20 tokens and I remember many of the flash crashes and how within minutes the order books were empty. People then tried to cut losses at whatever cost and they literally drove some ERC-20 tokens close to zero. They then got some spare ETH or in some cases BTC and it was a time in late 2017 and early 2018 when the sentiment flipped completely. They wanted out and sold BTC without hesitation.

When order books go empty because an ERC-20 bubble popped and the sentiment flips, it is risky to get in / back in.

...

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.

That's true, but I was thinking that large investors like institutions or governments or wealthy individuals take more BTC off the market for a longer period of time. If there is less BTC to be traded, there should be less BTC to be put up for sale. Now I admit anticipating the effects on volatility isn't trivial here, but I would assume that there is less overall resistance as most large investors probably don't leave their BTC on exchanges and put them up for sale at certain dollar marks.

Leverage and squeezes surely contribute to volatility though.

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. ...

...We still have to see how this bear market plays out, though. Everything is possible I feel.

DCA is probably more common for retail investors. I am not aware currently how BTC saving plans are available across countries, but it is a great option to constantly accumulate and with the upside potential BTC still has in my opinion, it is still a good timing these days.

As for the bear market, is this still a typical bear market? It feels quite neutral. If the definition is that any market significantly below the all time high is considered a bear market, then yes, but I think the catalyst is just missing these days and exchanges don't really have a particular interest in the price going up. They have their daily volume and soak up their portion of every trade. If this goes on for the next five years, I think they could soak up a huge amount of BTC just by watching the price go sideways.

[justdimin]

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.

Yes, because if you have been here for 10 years, you do not really get startled or fear because you have seen it all and at this point we are not going to fear it. If you are a newbie whose first ever bitcoin was in October for 125k and now it's low? You would be scared and it would still be scary to you.

But the more cycles you face, the more bear markets you will see and for that reason you are going to do fine and not feel fear. I am on my 4th cycle right now, I was here in 2014 one, I was here in 2018 one and I was here in 2022 one, now I am on my fourth with 2026 and to me this is nothing. In fact, after a while you get happy to see bear prices, and market crashing because you can buy it for cheaper. I am happy that I do not have to pay 125k for it and can buy it for much cheaper.