Bitcoin today records the longest bear market ever. The Bitcoin market has primarily showcased three major cycles in its history of 10 years. The three cycles have some remarkable similarities, only each is bigger than the last one.
2011- The first ever Hype in Bitcoin
The driving force for the adoption of Bitcoin had earlier been anonymity and decentralization. The tech-savvy could efficiently mine a couple of bitcoins using his PC only. However, with increasing recognition and value we say the evolution of GPU miners.
The Price of Bitcoin reached a dollar of the first time on 14th February 2011. The FOMO got the better of the US, Japanese and Chinese investors who pushed the price till 20$ before Bitcoin went under a flash crash after the infamous Mt. Gox theft. As much as 50,000 BTC were stolen.
The hope of a new decentralized global currency with limited supply to eliminate financial corruption is lost. The Mt. Gox crisis lost people’s faith because it was a common notion that gold is the safest and digital money is exposed to a threat.
The bear market lasted for 18 weeks before the price started to consolidate to reach a new high in November 2013.
2014 – Bear Market
Bitcoin, after the Mt. Gox incident had caught the attention of around the world. While majority rebuffed the cryptocurrency, some visionaries realized the potential of Bitcoin, and the price excited to over 1100$ in a brief period.
The market suffered blows from regulatory changes and mining difficulties. The GPU miners were no longer profitable in contrast with the specialized ASIC miners.
Many Bitcoin supporters creators realized the potential of blockchain and its application in almost all virtual applications. The bear market led to the development of platforms like Ethereum and Dash Coin. Ethereum paved the way for the next price hype.
The bear market lasted for 57 weeks before the price started to consolidate again.
Crypto Winter: 2018- Bear Market
The EVM platform and ERC-20 token standardization led to the development of more than 2000 cryptocurrencies. Majority of the cryptocurrencies were false or weak promised which led to the built up of a $700 billion bubble in December 2017. There were numerous blockchain projects in the market, and it was ripe for manipulation and hysteria.
This crypto winter bear market is also affected by regulatory news and mining difficulties. However, the scalability issue was the most pressing problem at the moment. Lags in transactions and high transaction cost along with evident price hype in almost all the 2000+ cryptocurrencies brought back memories of the internet bubble in the 2000s.
This bear market has lasted for 58 weeks, and it is still in continuation.
The Market Cycles
Bitcoin is completely decentralized and works on POW (Proof of Work) with a controlled supply. Moreover, the number of people and firms involved with cryptocurrencies have evidently increased exponentially. The scale of the rise in price has been higher than before. Furthermore, the number of weeks each of the bear markets has lasted was also larger.
With Bitcoin facing regulatory hurdles, scalability issues and immense competition especially from altcoins, Stablecoins and or a centralized DLT system, the path ahead is still unclear. Conviction from HODLers and progress to make it secure and safe is the only way forward.
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A blockchain enthusiast, my expertise extends to marketing and advertising through which I was able to help a few notable startups in generating initial traction. Follow me on Twitter at @abhinavagrwl94 and reach out to me at abhinav[at]coingape.com