MicroStrategy's Significant Bitcoin Impairment Losses May Mislead: Berenberg
Turkish Crypto Exchange Thodex CEO Faruk Özer Sentenced to 11,196 Years in Prison for Collapse
DeFi and Credit Risk
An 80% Drop From Bitcoin’s High Would Lead to $13,800 per Unit
After achieving the crypto asset's all-time high (ATH) of $69K last year, bitcoin markets have been gloomy for the following six months. While costs are depressing for many, it has led to speculation about how long the downward trend will continue.
Using today's bitcoin (BTC) exchange rates versus the US dollar, the leading crypto asset has lost 45 percent since the beginning of the year. During long-term negative cycles, when BTC peaks, the price usually drops dramatically, and after a few specific tops, BTC has plunged more than 80% below the high.
For example, in April 2013, BTC hit an all-time high of $259 per unit before plummeting to $50 per unit, losing 82.6 percent of its value. BTC's value fell by 86.9% from its all-time high of $1,163 per unit in November 2013 to January 2016. Bitcoin's USD value would decrease to a low of $13,800 per unit if it lost 80% of its value from its current $69K peak six months ago.
The Softer Bear Market Theory
However, there's a chance that this time around's bear cycle will be shorter and less severe. While BTC has experienced three dips of 80% or more, it has seen a lot more 32-51% drops. Because bitcoin's peak was not so large, the crypto asset's bottom may not be as painful. In fact, the last bitcoin bull run was significantly longer and had a lower percentage gain than prior all-time highs. On May 1, cryptocurrency enthusiast and YouTuber 'Colin Talks Crypto' addressed the milder bear market idea.
BTC gained 1,518.75 percent between its peak on August 17, 2012 ($16) and its peak on April 10, 2013 ($259). Between the top of the cycle on April 10, 2013 and the peak in November 2013, bitcoin gained 349.03 percent. Then, from November 2013 to December 2017, BTC increased by 1,590.97 percent.
This time, though, the increase from December 2017 to November 2021 was only 250.85 percent. It's the smallest percentage gain of all the major bull runs in the history of the crypto asset. The weaker price increase could lead to a gentler bitcoin bear market, rather than an 80 percent or more drop.
The lead-up to the 2021 ATH spanned almost 400 days, in addition to the smaller ATH. Prior to 2017, the bitcoin bull run lasted only 200 days, or nearly half of that time. This means that, while the present bear market's brunt may be gentler in certain ways, it may persist much longer than prior bad markets.
======
Related Video:
