- Cryptocurrencies may now be in bear market.
- The three reasons why the crypto market is in bear territory is because financial markets are down, the supercycle did not materialize, and countries are banning crypto.
The continuous bloodbath happening in the crypto market today may be an suggestive of a fear-led movement in the next weeks at least. In fact, some may even believe that the crypto market is now in bear territory.
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Of course, many are hoping for the market to recover. However, the market has been in a tumble for a couple of months already. Bear market or not, people need to be cautious, otherwise, they may lose even more money.
Here are three reasons why the crypto market is possibly in bear territory.
1. Financial Markets Are Down
The global financial market has been suffering a lot in the past weeks. In fact, some of these markets are worse than the crypto market. These include stocks, especially tech-focused companies as well as those in the S&P 500, Nasdaq, and more.
In fact, a report by Bloomberg stated that Tesla CEO Elon Musk has lost over $25 billion, while Amazon Founder Jeff Bezos shed $20 billion off his portfolio.
As in various financial markets, people tend to hedge their assets to prevent further losses. The same may be true with the crypto market. Instead of keeping their value in staple currencies, people trade them into stablecoins such as USDT and USDC.
2. The Supercycle Did Not Materialize
Unfortunately, another reason why the crypto market is in bear territory is because the so-called supercycle did not happen.
For those who may not be aware, the supercycle is referring to the period wherein Bitcoin and major currencies follow a certain trend that happen once every 4 years. This supercycle happened in 2013 and 2017, in which cryptocurrencies saw an astounding rally that made many people rich.
The same supercycle was predicted in 2021 when people claimed Bitcoin would reach $100,000 and Ethereum $10,000 per piece. To the dismay of many, this did not happen. This is why the hype within crypto is waning.
3. Countries Are Banning Crypto
Finally, crypto is in a supposed bear market because a lot of countries are tightening their stance against these assets.
Aside from the US, some countries in Asia such as Singapore and Indonesia, as well as European countries UK and Russia, have announced their respective crypto crackdown actions.
To be fair, many of these countries announced their stringent crypto stance due to the asset class’ volatility. Only China and perhaps the US were the exemption last year.
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