Bitcoin has reached a new low again in the last few hours. On top of that, the total market cap of cryptocurrencies fell towards USD 1.6 Trillion or around -20%. Major cryptocurrencies continued to lose ground and are now just around their respective support areas. In November, many investors were still hoping for a Bitcoin price of $100,000. Is 2022 a Crypto Bear Market Year?
Crypto Market Cap Below $2 Trillion
Bitcoin, the biggest crypto by market cap, has dipped below $36,000 in the past few hours. The crash followed a brief “fakeout” in which the price surged above $43,000 but dropped back down to $41,000 extremely quickly. This shows that investors are still unsure of the market direction, and traders are rather holding the horses.
The strong psychological support of BTC at $41,000 collapsed and prices fell below the $40,000 mark for the first time in months. As a result, the price temporarily fell below $36,000, which was the lowest Bitcoin price since late July, the bottom of the major spring correction. All cryptos followed the same course of action, and all cryptos lost an average of 20% in the past few days.
On the other hand, the equity market also suffered a lot. Many hedge fund managers started reassessing their portfolios. Anticipation of a lower market is expected, as the uptrend was extended for more than 1 year now. Additionally, looking at the previous market trend of both cryptos and equities, we can see that an adjustment was overdue.
A Crypto Bear Market could be Coming Soon
In the last few weeks, there was still hope that the Bitcoin crashes could only be a medium-term correction and that the price could become bullish again in the first quarter of 2022. But the high number of drops to below $40,000 raise doubts as to whether 2022 could not be dominated by a Bitcoin bear market after all. When Bitcoin moves, the entire crypto market moves as well. This bear market trend could be attributed to the entire crypto market as well.
The hopes were based on the fact that the current all-time high of $68,000 is very unlikely to be the peak of a bull market, given the major bull markets of 2013 and 2017. But now it looks like we could actually enter a Bitcoin bear market.
How Long will the Crypto Crash Last?
Historically, a long-term bear market has meant an 80% drop from Bitcoin Peak in the previous bull market. At the moment we are not even at 50%. As such, there is still hope that the long-term bullish cycle is still in place, but has only greatly lengthened in 2021 and 2022.
Accordingly, we would not experience a “real” crypto bear market in 2022, but only a severe price correction. However, with the latest developments on the market, it is becoming increasingly unlikely that Bitcoin will reach new all-time highs in the first quarter of 2022, as we thought possible 1-2 months ago.