The end of the so-called “crypto winter”, i.e. the prolonged bearish period for cryptocurrencies, may still be far away. This is what a recent report by Grayscale Investments stated, taking into account previous market cycles.
According to the world’s largest digital asset manager, it is possible that the downturn will last another 250 days, or approximately 8 months. However, the company hinted that this moment presents investors with the best buying opportunity.
In its “Bear Markets in Perspective” report, Grayscale pointed out that a cryptocurrency market cycle lasts, on average, 4 years (1275 days).
And a bear market starts when the realized price moves below the market price (the current price of the asset).
To calculate the realized price, the company adds up all the assets by the purchase price and divides by the market value of the asset. In this way, the number of positions that are in profit or loss is possible.
In the case of BTC, for example, Grayscale noted that the cryptocurrency’s price surpassed the market price on June 13. This signaled the beginning of the bear market.
As Grayscale highlighted, the long positions of BTC lasted more than six months in 2021. That’s because investors were increasingly interested in holding their positions. However, when prices started to fall, there was an impasse.
Furthermore, the report noted that BTC’s movement in the all-time high (ATH) range in the past year has been greater than in previous cycles. The company attributed this to the rapid growth of the market in recent years, adding that it has become easier for retail and institutional investors to invest in crypto:
“The cycle started in 2020 appears to have had a longer duration in the ATH range, with two prolonged peaks in contrast to the sharp rise and fall in previous cycles. This may have been due to the increasing maturity of the cryptocurrency market that did not exist in previous cycles.”
Strongest crypto market
Despite the current low, Grayscale pondered that the BTC network continues to operate as designed. According to the company, the network is on track to process $18 trillion in transactions this year, up from $13 trillion recorded in 2021.
Company concluded by saying that regardless of the severity of each market cycle, the cryptocurrency industry always comes out stronger in the end. After all, every failure recorded in the space helps shape the cryptocurrency industry:
“Despite falling prices, liquidations and volatility, the cryptocurrency industry continues to build and innovate, pushing the boundaries of what is possible.”