The Bitcoin (BTC), market’s tendency for a crash of over 80% may be ending after strong bull runs.
According to Pantera Capital, a California-based hedge fund, this is the conclusion of a new report. The report explains that recent price drops in Bitcoin have been more mild than those of the past.
In 2013,-15 and 2017,-18, Bitcoin plummeted by as much 83%, after reaching near $1,111 and $20,000.89, respectively. Similar to the bull run that cryptocurrency experienced in 2019-20, and 2020-2021, there were massive price corrections. However, their retracements were still -61% and 54% respectively.
Bitcoin bear and bull markets throughout history. Source: Pantera Capital
Pantera Capital’s chief executive Dan Morehead highlighted the steady drop in selling sentiment following the bearish 2013-15 and 2017-18 cycles. He noted that future bear markets will be “shallower.” He explained:
“I have long believed that the market will become more diverse, more valuable and more institutionalized, so the magnitude of price swings will decrease.”
These statements were made as Bitcoin renewed its bullishness to retest the record high of $65,000
After years of rejections, the U.S. Securities and Exchange Commission approved a Bitcoin exchange-traded funds (ETF). This marked the first time that the USD/BTC has risen above $60,000 since May 1.
ProShare’s Bitcoin Strategy ETF approval raised hopes that institutional investors would be able to get exposure in the BTC markets. This also helped Bitcoin erase almost all losses during the April-July bear market as the BTC prices doubled to regain levels above $60,000.
The history of Bitcoin price fluctuations Source: Pantera Capital
As Bitcoin becomes a mainstream asset, it’s more common to hear $100,000 valuations.
Related: Bitcoin heads towards 2nd RSI peak at $200K BTC.
Morehead mentioned the stock-to-flow model, which studies the effect of Bitcoin’s “halving” events on prices. This is to rule out a similar bullish outlook. He pointed out that the first halving decreased the new Bitcoin issuance rate 15% (around 10.5million BTC) which led to a 9,212% BTC price rise.
After each halving, Bitcoin supply is reduced. Source: Pantera Capital
The second halving also reduced the amount of Bitcoin available by one-third of total Bitcoins outstanding (15.75 millions BTC). The bull run resulted in a 2,910% increase in Bitcoin supply, which was almost three times the previous one. This had a slight impact on Bitcoin’s price.
Post-Bitcoin halving rallies. Source: Pantera Capital
The most recent halving was made on May 11, 2020. This further reduced the new BTC supply against the circulating supply. Bitcoin rallied by more than 720% since then.
“The flipside is that we probably won’t see any more 100x-in–a-year rallies,” Morehead said.
Logarithmically, the cycles that are shown make today’s level seem cheap to me.com. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
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