The cryptocurrency market has gone through several terrible bear markets during its history, but it has grown more confident each time. Examining the same technical indicators that have been best at identifying price bottoms during the past bearish cycle can help you better comprehend the signals of change in the current bear market.
But first, let’s study these indications and understand what a cryptocurrency bear market is like. Let’s get going!
What Are The Four Different Phases Of The Crypto Bear Market?
When the price of important cryptocurrencies, such as Bitcoin, has plummeted by at minimum 20% from its recent peak and is still falling, it is said to be in a bear market for cryptocurrencies. On the other hand, a crypto bull market is one where the price of significant crypto assets keeps rising. There are typically four stages to bear markets:
High prices characterize the first phase. After this period, investors begin to withdraw their funds and receive profits.
Previously encouraging economic indicators deteriorated and dropped asset prices and trading activity in the second phase. As things start to get worse, some investors experience panic, which is known as capitulation.
In the third phase, speculators enter the market, raising prices and transaction volume.
The fourth and final phase sees Crypto collapse again, but this time more gradually. Bull markets eventually emerge as investors start to invest again, drawn by cheaper prices and encouraging news.
What Drives The Bear Market In Cryptocurrency?
An economic recession typically precedes or follows a bear market. Investors can gauge the economy’s health by attentively observing important indicators like recruitment, rising wages, inflation, and interest rates. Frequent symptoms in the COVID-19 outbreak were slightly different, and the economy had been in danger due to numerous closures, high unemployment rates, and social segregation policies.
Investors predict a large drop in corporate earnings when they see an economic decline. As a result, people sell their equities, which reduces markets and lowers prices. A bear market could predict future economic difficulties and higher unemployment rates.
Some Indicators Of A Bear Market In Cryptocurrency
An investor or trader should be conscious of the following warning signs:
Death cross: The technical indicator known as a “death cross” is formed when an asset’s 50-day moving average crosses its 200-day moving average.
“Backwardation”: When the price of an asset, mainly in the futures market, is less than the price in the open market, this is referred to as “backwardation.”
Lower trading volume: This might indicate that consumers have begun hoarding their coins due to the volatile nature of the market.
Top 3 Bear Market Indications For Cryptocurrencies
The top three bear market indicators for cryptocurrencies include
- The 200-day simple rolling average: It is the most important moving average used by investors and brokers worldwide. To signal the end of a negative trend, the 200-day SMA frequently breaks and closes above regularly. The longer an asset’s price remains above the 200-day SMA, the stronger the signal.
- RSI Oscillator: The Relative Strength Index is another useful technical indicator that can help investors identify the selling and buying pressure (RSI). RSI reversal indicators often provide more important signals in more extended time frames. For a more systematic approach, a weekly RSI break above the 50 mid-level may confirm the end of a bear market.
- The multiplier for the Moving Average Another sign of a bear market bottom is the 4-year SMA, which tracks the 4-year halving cycle. The monthly chart with the 48-period (4 x 12 months) SMA added for cryptocurrency investors are preferred. The bear market had stopped every time the Bitcoin price dropped underneath the 48-SMA before recovering again.
When Will The Crypto Bearish Market End?
The resident experts from Cointelegraph debate how much further this cryptocurrency bear market might go and when we might start to see some volatility return to the markets on this week’s episode of The Market Report. We begin by delving into this week’s most recent market headlines. Bitcoin’s price is “much worse” when it approaches $20,000. US data increases stocks.
Risk assets may see a welcome rebound after the October Empire State Manufacturing Index results significantly below forecasts. The figures decreased to -9.1 in October, much below the predicted -4.3 and the -1.5 estimate from September. Although some industry analysts believe this to be far worse than anticipated, could this lead to a bounce shortly for Bitcoin tickers down to $19,212?
As A Trader Predicts Capitulation “Will Happen,” Bitcoin Clings To $19,000
The weekly Finish in 2016 saw Bitcoin remain inflexibly bound to $19,000 despite analysts’ warnings that turbulence was overdue. After a week of typical fakeouts and events caused by US economic data, Bitcoin reverted to its initial position and isn’t exhibiting any symptoms of departing from its established range. So when will the markets experience some excitement and volatility again?
Midterm Election Dump Following?
Whether this 2018 BTC graphic fractal is true, Bitcoin will reach $12,000. Bitcoin accumulating during the bear market of 2022 appears to be more robust than it was in 2018, but economic headwinds may ruin the fun this time. The United States midterm elections may not be a big deal to bitcoin investors, but a strange fractal from 2018 may offer some insight.
Be Ready For The Research
Remember, the crypto markets are volatile, and predicting any given token’s future is challenging. Therefore, if you want to anticipate the end of the bearish market, keep analyzing the most recent developments in the world of Crypto. Besides, while at it, always ask yourself these two questions:
Do the market’s present circumstances favor bulls or bears?
What are the projections for the upcoming several months?
Remember, strong analysis is the key to a reliable investment. All the best!