Be prepared for danger in times of peace: A review of the decline of the Bitcoin bull market

Written by:David Canellis

Translation: VernacularBlockchain

The drastic fluctuations of Bitcoin have long taught us to "accept what comes our way."

We seem to have grown accustomed to the expectation that even in the midst of a roaring bull market, there will inevitably be a sharp correction that will put our hopes, dreams, andwalletThe remaining balance will be crushed together.

Therefore, we all think it is completely understandable that Bitcoin suddenly plummeted by 50% on its way to sprinting to six figures or even higher prices.

Does this expectation make sense?

First of all, it needs to be made clear that Bitcoin does have a "tradition" of plummeting about 80% from the peak of the bull market to the bottom of the bear market. Since Bitcoin's first sharp rise in 2011, every cycle has been almost without exception.

However, this article is not about pullbacks during bear markets (for that, please refer to our previous analysis). Instead, we will focus on pullbacks during bull markets, as we are currently experiencing.Xiaobai NavigationExperiencing this situation.

The chart below shows Bitcoin’s price performance over six different time spans, ranging from three days to three months, and is presented on a rolling basis, from the beginning of the cycle (bottom) to the all-time high (peak).

Each line represents a time span. For example, the dark purple line shows the percentage difference between each daily low and the open three days earlier, while the green line shows a like-for-like comparison over a three-month period.

The dotted line at the bottom represents the retracement level of 50%. As shown in the chart, during the bull market from August 2015 to December 2017, there has never been such a large retracement.

The largest pullback during this cycle occurred near the end of September 2017, with a drop of 40% in two weeks.

However, in the subsequent bull market from 2018 to 2021, it experienced three sharp corrections exceeding 50%.

One of them was the market crash caused by the epidemic in March 2020, when the stock market experienced a series of "Black Mondays" one after another.

Bitcoin fell by 50% or more in almost all time spans, with the exception of the three-month time span, which was slightly lower than 50% at 47%.

Two other major retracements occurred in May and July 2021, when Bitcoin fell from an all-time high of more than $60,000 to $30,000. However, in the following four months, Bitcoin quickly rebounded to a new high of nearly $69,000.

This time the pullback is relatively mild; the most significant correction in the bull market occurred in the first week of August.

Bitcoin has fallen 30% over multiple timeframes, from a high of over $70,000 in June to a low of $49,200.

Of course, this doesn’t mean that Bitcoin has lost its volatility. I still think there will be ups and downs in the future.

It is worth noting that the most severe pullbacks in history often occur at the end of a bull market.

Therefore, the longer the bull market lasts without a major correction, the more unsettling the uncertainty about future trends becomes - which is also the unique "thrill" of investing in Bitcoin.

The article comes from the Internet:Be prepared for danger in times of peace: A review of the decline of the Bitcoin bull market

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