The overall cryptocurrency market is facing an ongoing slump, resulting in notable plunges in the prices of crypto coins across the board. This scenario, when the value of cryptocurrencies sees a slump, or ‘cool down’, is termed ‘Crypto Winter.’ While this is not the first time the market has faced a Crypto Winter, there are no certain parameters that can help ascertain exactly when the phase will be over. However, given the market’s historic performance and market cycles, the latest research by US-based market insights firm Grayscale suggests that the current Crypto Winter may last for another 250 days.
How long does a crypto cycle usually last?
In its research titled “Bear Markets in Perspective,” Grayscale noted that the crypto market operates just like traditional economic and financial markets, and hence has “cycles that ebb and flow.”
Grayscale said that on average, crypto market cycles last for around four years, or approximately 1,275 days. “While methods vary for identifying crypto market cycles, we can quantitatively define a cycle by when the Realised Price moves below the Market Price (the current trading price of an asset), using Bitcoin prices as a proxy,” Grayscale said in its report.
Realised Price is defined as “the sum of all assets at their purchase price or realised market capitalisation, divided by the market capitalisation of the asset which provides a measure of how many positions are in or out of profit.”
“As of June 13, 2022, the Realised Price of Bitcoin crossed below the Market Price signaling that we may officially have entered a bear market,” Grayscale noted.
Is this a good time to buy the dip?
As for any market, a dip usually signifies an opportune moment to buy. Grayscale said, “ In the natural pattern of market cycles, some believe these points in the market cycle could present some of the best opportunities to buy.”
“We may see another ~250 days of high-value buying opportunities when compared to previous cycles,” the research stated.
How did the previous crypto market cycles perform?
As per Grayscale, back in 2012, the “market took 603 days to peak.” The firm noted that this cycle increases by roughly 180 days for each subsequent instance. The 2016 cycle took 786 days to peak, whereas the 2020 one took 952 days.
“From peak-to-trough, the 2012 and 2016 cycles lasted approximately 4 years, or 1,290 and 1,257 days respectively, and took 391 days to fall 73 percent in 2012, and 364 days to fall 84 percent in 2016,” the study pointed out.
“In the current 2020 cycle, we are 1,198 days in as of July 12, 2022, which could represent another approximate four months left in this cycle until the Realised Price crosses back above the Market Price,” Grayscale said. “ Bitcoin is 222 days off the all-time high, which means we may see another 5-6 months of downward or sideways price movement. Historically, market bottoms also appear to come one month sooner each time.”
Grayscale also noted that in the case of the 2012 and 2016 cycles, the market took three years to regain all-time highs, 1,082 and 1,059 days respectively. “It took another year to push a new all-time high again after that.”
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.