Originally, when looking at Bitcoin and the crypto only market, I was predicting that the start of the next bull run will be sometime around the 4th Qtr of 2022 or early 2023. The beginning of the bull market typically happens after a period of time after the final capitulation event of the bear market.
I am predicting that the final capitulation event would possibly be sometime around Sept or Oct 2022 before and after the announcement of the United States Q2 GDP.
But is the macro-outlook safe? The Cryptocurrency market is highly correlated with Nasdaq. And if we start looking at the overall market outlook, I fear that there may potentially be more downward selling pressure to go.
Take a look at the chart.
Yes, It’s messy. I will be explaining the left side of the chart first and eventually move towards explaining the right side.
In this chart, I looked at 2 previous US recession (Dot com and housing bubble)
The Dot com United State recession took a duration of 8 months.
However, it took 30 months for the market S&P and Nasdaq to go from top to bottom. After bottoming, the S&P took 5 years to recover from this and get back to a break-even point. However, this was followed by the Housing bubble.
The Housing Bubble was a duration of 18 months. US was in a recession for 18 months. S&P and Nasdaq took 18 months to go from top to bottom in that cycle.
S&P took 4 years following this crash to recover back to its breakeven point.
Nasdaq took 13 years to recover back to its break-even point of its top during the Dot com bubble.
In the current bear market, there is a high possibility of US declaring of being in an economic state of recession this Sept 29, 2022.
So far, in this bear market, we’ve seen 6 month of downward price movement. when looking at previous movement from top to bottom, a 50% drop for S&P ATH and Nasdaq ATH is most likely to happen for this market cycle and it is STILL a long way down!
I hate to think about it, but I can only imagine the massive amount of liquidation that will happen in crypto. I highly believe this crypto market cycle will be bloodier than any previous market cycle.
In the right of the chart, the dotted lines indicate 18 months and 30 months from the ATH for Nasdaq and S&P. This is a measurement from previous recession of the possibility of how long this downward trend may last.
The -50% correction is shown by the black line in the Nasdaq panel and S&P panel. This is a level of where the possible bottom may be based on previous recessions.
Bitcoin moves the crypto market. If something happens to Bitcoin’s price, then the crypto market typically follows.
I believe that:
- If Bitcoin cannot be treated like digital gold, then we will probably see a MASSIVE continuation of downhill price movement especially based on how correlated the crypto asset class is to Nasdaq, this is knowing that S&P and Nasdaq can still crash another 25–30% from their ATH.
- The best-case scenario for Bitcoin, is if BTC gets treated as digital gold and the asset becomes a hedge against the other falling assets.
- If the US is NOT declare as being in an economic state of recession this Sept 2022, then we may potentially see a rally.
I know that this analysis looks scary as it’s looking at if we do get a recession this September 2022.
However, this article is my analysis and is not financial advice. This article is for entertainment purpose only and is my interpretation of what I am seeing. The article should not be used for making any financial decisions by any means.