GM. This is Milk Road, your ride-or-die friend in crypto (we’re here with you in the good times, and the bad).
Here’s what we got for you today:
- ✍️ BTC is meeting bear market criteria…
- 🎙️ The Milk Road Show: Crypto Is Crashing… Why the Bull Case Is Still Alive w/ Matt Hougan & Ryan Rasmussen
- 🍪 Coinbase’s DeFi mullet continues to grow
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BTC MEETS BEAR MARKET CRITERIA… BUT WHAT KIND OF BEAR MARKET IS IT? 🤨
Is this a Bitcoin pullback, or a bear market?
Short answer: it’s a technical bear market.
Long answer: BUP-BUP-BUP! Take your finger off the panic button, turn around slowly, and keep your hands where I can see ‘em!
Before you make any rash decisions, listen to what Eliézer Ndinga (Global Head of Research at 21shares) has to say…
Yes, Bitcoin is currently meeting the classic criteria for a bear market, which (in both traditional finance and crypto) is typically defined like so:
- We see a sustained price decline of 20%+ from the previous peak
- There’s a wave of persistent negative sentiment
- Trading volumes weaken
- Dips aren’t bought
As a result, we get charts like this:
But there are two key things to consider here…
1/ Not all bear markets are created equal
They essentially come in two different flavors:
Cyclical bear markets
- Average drop: 84%
- Duration: Around 2.5 years
Short-term bear markets
- Average drop: 36%
- Duration: 2–3 months
2/ From where we’re at today, we’ve seen this movie before
(Multiple times in fact.)
Within the most recent Bitcoin bull market (starting late 2022) we’ve seen seven gut wrenching pullbacks of 20-40% – five of which matched the ‘short-term bear market’ criteria: 20%+ drop, over 2+ months. 👇
We’re currently 40 days into this current pullback – so the million dollar question is:
Is this a short-term bear market, or the start of a cyclical bear market?
Keep scrolling to the next article and we’ll dig into just that! 👇
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BTC MEETS BEAR MARKET CRITERIA… BUT WHAT KIND OF BEAR MARKET IS IT? 🤨 (P2)
Back to the discussion at hand: are we in a short-term or cyclical bear market?
Right now, most folks are split…
Some believe it's a cyclical bear market – their thinking being:
Crypto cycles have typically peaked with a 4yr cadence (and that 4yrs was up in early October, exactly when the crash began).
While others believe it's a short-term bear market – their reasoning being:
The liquidity cycle (the process of governments/central banks pumping fresh cash into the global economy – which drives crypto prices) appears to have been delayed, and is only just now looking like it’s about to pick up. 👇
You probably know by now that we fall into the latter category – we dug further into the ‘extended cycle’ theory and what’s stretching it (spoiler: it’s AI) in yesterday’s edition.
But it’s worth noting: we don’t have a crystal ball (no one does). All anyone has is their thesis, and varying degrees of conviction to help them see it realized.
One trick to sticking with your thesis (whichever side of a debate you fall on) is reminding yourself that periods that feel insanely bullish/bearish in the moment can be completely erased with hindsight.
E.g. The multiple 20-40% hits that Bitcoin took throughout 2016/2017? They hurt like hell in the moment.
… but with hindsight, most people have since forgotten those down periods and now just focus on the fact that BTC moved from ~$430 to ~$20k in that same timeframe. 👇
We touched on this last Friday, but it’s worth repeating…
While BTC moved up 520% from Jan 2023 to early/mid Nov of this year (or 173% a year for 3yrs) – over those 36 months, BTC only reached new highs in 10 of those months.
That means 73% of the time, Bitcoin was in ‘boring chop’ mode or ‘I just checked TradingView and want to hurl’ mode.
And having an itchy trigger finger that puts you against your broader thesis in the bad times can often lead to you missing out on the good times.
So the question you gotta ask yourself when the charts are in a fist fight with your broader thesis, is this:
Can you stomach these kinds of moments?
(If not, crypto might not be a good fit.)
And BTW — if you think we’re entering a cyclical bear and your thesis is telling you it’s time to sell, that’s ok too!
That’s what it’s there for.
CRYPTO PRO “WHERE ARE WE IN THE CYCLE?” INDICATORS 🤔
Is crypto cooked?
We don’t think so.
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The goal with these indicators is to spot the bull market peak before the inevitable bear market hits your bags hard.
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