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Now that we have established that we are in a bear market, how long will it last?
For me the confirmation for the bear scenario was two fold: a) breaking the trend line at 38k which had a multi year support and b) a lower low bringing us sub 28k. Some weeks ago there were still many indicators in place signalling for a "3rd wave". But since that did not transpire we are now in the "green scenario".
Although if you look closely, the strong rebound I have been expecting has not been quite as strong. Instead, there was a small rebound followed by some weeks of a sideways movement which we are still in. But will prices crash just straight down to ~22k? This seems unlikely, since we are now in the 9th weekly red candle in a row. I think this hasn't happened in Bitcoin's history yet! Yet on the monthly scale we are only in the second red candle. What this tells me among other reasons is that it is more likely that there will be a short lived upward push, perhaps up to about 38k.
Looking at the RSI, we can see that we are officially in bear market territory as well. In the next chart we can also see that from the peak of the RSI to the low it has been 426 days in 2014, 296 days in 2018 and perhaps it will be about 460 days for 2022.
We can also see that all previous bear markets have retraced to the monthly trend line established by the previous lows (seen here in orange). This cycle has not quite reached that level and we can expect it to be at around 22-25k. Finally, all previous bear markets have stayed either half a year or a full year in the RSI bear market territory. Since we have just entered this area we can therefore expect to be at least another half a year in a bear market. This would be sometime in fall. Interestingly, all previous bull runs have started in winter. So it is quite likely that we will see the bottom of the bear market in fall/winter of this year with a beginning of a bullish macro phase.
For the reasons mentioned here, I think the "purple scenario" is more likely. A further crash down to 22k seems "too fast". If there is one thing that is for certain in bear markets it is that they take time to play out. A small rally to about 36-38k would give the cycle enough time to play out more to previous ones. With that said, be patient - don't expect prices to rally much until the end of the year!
As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!
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