The recovery of Bitcoin and other cryptocurrencies at the start of the year brought about hopes that the bear market had finally come to an end. However, the market has since reversed with assets in the space losing a good portion of their Q1 gains. With the current trend, it is more than likely that the bear market is not over.
Historical Bitcoin Trends Suggest Otherwise
Over the last four bull markets that Bitcoin has seen since its inception, a number of things stand out. The first is that the bear market following a bull market does not seem to come to an end until the year of the halving.
The Bitcoin Halving is an important event because it cuts down the BTC block rewards in half, hence reducing the number of new BTC being released into circulation. This is a bullish event and has always heralded the start of the bull market for the cryptocurrency.
Currently, the market is still about a year away from the next Bitcoin halving set to happen in 2024, and if historical trends are anything to go by, then the bear market is likely to persist through 2023 and into early next year before the first hallmarks of the bull run are seen.
Following previous trends, there could still be more pain for BTC to come. If it is to lose around 85% of its all-time high value as it did before the last bull run, then the bottom of the market has likely not been reached yet either.
Each bull market began with a halving event | Source: BTCUSD on TradingView.com
Investor Sentiment Remains Low
After the euphoria of the pump in the first half of 2023 died down, investors have been at a loss when it comes to pitching their tents. As a result, investor sentiment has drawn to a standstill as the Crypto Fear & Greed Index now sits at a neutral 52.
This means that investors are not doing anything bullish like buying more Bitcoin at this time, so the bear market is persisting as sellers continue to dominate. A return back into the greed territory would see prices rise again but this is unlikely given that buyers are likely waiting for BTC to revisit $20,000 before getting back in the game.
For now, BTC is still ranging below $27,000, a support level that bears have successfully flipped into resistance. However, it is still trading above its 100-day moving average, which suggests bullish momentum in the short term, albeit a short-lived one.