The best time to invest is when “there’s blood in the streets”, so if you see bitcoin in a bear market, it’s probably time to consider adding to your stack.
The trouble is how to tell if we’re actually in a bear market or not. There’s always a mix of signals going on, and combined with your own personal bias, it can be tough to know exactly what the market sentiment is. Is bitcoin is poised to go lower, continue sideways, or ready for launch?
As much as people talk about technical analysis, there seems to be very little actual proof that you can look to when deciding if bitcoin is in a bear market. There are plenty of chart indicators that seem to be useful in hindsight, but in the moment, those indicators can be unclear, or give false information. Personally, I never make any trades based on technical analysis.
All my bear market signals are social. I’m not a technical person, and I’m not a trader. I can read tweets and follow lines on a graph, but that doesn’t mean I understand what I’m reading. Don’t trust, verify, right? So without trusting technical indicators of a bear market, here are the three things I look at to gauge whether bitcoin is in a bear market or not.
3 Ways To Know If Bitcoin Is In A Bear Market
1. Constant Negative News In The Mainstream Media
One surefire way to know you’re in a bear market is when you see a constant stream of FUD coming from the media. It doesn’t matter if it’s new or old FUD, just as long as it’s bad news.
Bitcoin down 25%? Print it! Bitcoin is bad for the environment? Print it! Government regulation going to stifle bitcoin development? Print it!
Bad news sells in the world of bitcoin because everyone reads it. That’s called CLICKBAIT. Nocoiners love to read it because it confirms their bias. Precoiners read it because they think it provides a balanced perspective from “trusted” sources. Even bitcoiners read it because they can’t wait to dunk on it on Twitter.
If it looks like things are going horribly wrong for bitcoin at the moment, then we’re probably in a bear market.
The good news is that this sentiment is mostly just normieland and crypto news cycle trash. The reality is that bitcoiners are always building cool stuff for bitcoin, and there is an elite team of enthusiastic, hard working bitcoiners working around the clock to make bitcoin better. Many bitcoiners are motivated purely by ideological reasons, so it doesn’t matter if the price is up, down, or sideways. They wake up and grind, the same as any day!
Take me, for instance. The market is down below $30,000 today after plunging from $35,000 just a few days ago. A few months back, we were feeling pretty good during the bull run up to $69,000. Does it suck to see your net worth drop 50%? Sure! I’m not too worried about it though. I’m still publishing posts. Still buying bitcoin. I’m looking at maybe starting a local meetup. Still listening to podcasts and reading books. Still doing the bitcoin thing.
When market sentiment changes positive, the mainstream media tends to switch to a lot of price talk, again, because it makes great headlines.
Nocoiners Taking Victory Laps
Another great sub-signal of negative mainstream press is when vocal nocoiners like Peter Schiff, Nouriel Roubini, Paul Krugman, and Nassim Taleb are taking victory laps. These tweets were all from June 17/18 2022, so we are obviously entering bear market territory here.
Of course, what they fail to recognize is that many of them have been making the same calls since the 2011 to 2013 era.
2. You Stop Looking At The Price So Much
During a bull market in bitcoin, it can be hard to focus on anything when you see yourself making $1,000 per hour just refreshing your phone and watching the bitcoin price skyrocket. When the price is depressed for long periods of time, I tend to not do it as much. In fact, sometimes I’ll go half a day without checking just because it’s much more boring and stressful to watch a market go down every day.
Bitcoin is down again? Man, that sucks. I guess I need to keep busy doing something else or I’m going to get depressed thinking about how rich I used to be.
It’s all about habits. As you purposefully stop checking the price so much so you don’t get depressed, you just get out of the habit. Then bitcoin will trade sideways for several days or weeks and you realize the price is the same no matter how many times you look at it during the day. You don’t have any fiat left to buy bitcoin anyway, so who cares if it dips?
Honestly, checking the bitcoin price less often is healthy, and it’s one of the reasons many bitcoins say they like bear markets better than bull markets. You can actually focus on your work!
Bear cycles mint new bitcoinersMatt Odell
3. You’re Thinking About Selling And Getting Back In Later
No matter how much of a hodler you are, when you spot bearish sentiment and think a big crash is coming, it’s very tempting to think you can time the market. A literal quote from my friend who texted me just 10 minutes ago: Was gonna sell at 32k and buy back in, but didn’t really think it’d dip under 30k (We dipped to $27k).
The problem with something like this is you never know when the trend is going to reverse, and you never know when is the right time to buy back in. Let’s say my friend did sell at $32k. Would he have bought here at $29k, or kept waiting? Are we heading to $24k? $20k? Nobody knows.
If he bought back in right now, he’d get a measly 10% discount on his bitcoin, minus trading fees. Depending on what type of volume he’s trading, he may make only a few hundred dollars on the trade. Is it worth the risk? Probably not.
Whatever he decides to do, and whatever my advice may be, if you recognize in yourself that you are thinking about selling and buying back later, then we might be somewhere in a bear market.
Bear Markets Are For Building
Bear markets are where bitcoiners are made because there’s alot of time to focus on everything related to bitcoin other than the price. The price sucks. Don’t look at it. Do something else.
Personally, I built up a massive conviction about bitcoin during the 2018 Crypto Winter bear market. I read tons of bitcoin books and listened to podcasts every day for about two years. I built my first node too! 2018 to 2021 was one long massive study session for me.
Without the euphoria of getting bitcoin rich, I had to focus on something. What started as a simple desire to understand what I had bought ended up becoming a hobby and an obsession.
Bull markets are a drug full of adrenaline and dopamine. Bear markets force you to quit cold turkey and bring you back to reality. You don’t have to become a mega bitcoin enthusiast and bitcoin expert to be part of “team bitcoin”. Not everyone has the time or interest to fulfill that role. However, you can gain a basic understanding of why bitcoin has value, how to use it properly, and (what I think is the most important) why you are storing value in bitcoin versus other types of assets.
If you can’t answer those questions, bear markets are a great time to study up.
Bear Markets Are For Stacking Sats
Bear markets are also great for stacking cheap sats. Just a few months ago a dollar could only get you less than 2,000 satoshis. Right now, you can stack more than 3,300 sats per dollar. In an extended bear market, that price will fluctuate, but the great news is that you have time. You don’t have to overextend yourself and dump all your excess cash into bitcoin. Take your time. The price will likely remain low for a while, so just slowly add to your bitcoin position over time.
If the dip keeps on dipping, then you can keep stacking harder. It’s interesting when you have recurring buys set up to see that the same amount of dollars can buy you more and more bitcoin. In the future, as you look back on those buys, you’ll be surprised to see how cheap sats used to be. It’s still hard to imagine that I lived through a time when you could stack 丰100 million (1 whole bitcoin) for $3,000, and now $3k will only get you 丰10 million.
I think the key to getting comfortable with this strategy is to just start counting your net worth in bitcoin. 1 BTC = 1 BTC. Though the dollar value of your holdings changes over time, the amount of bitcoin you hold will only go up as you continue to stack.
In my experience, bear markets last for a long time, normally more than 12 months, or even several years. Bear markets are not “quick” to recover. If what you see is a quick dip below a price that makes you feel uncomfortable, and then an immediate or multi-day recovery, then what you experienced is a crash, or a dip. These are great buying opportunities amidst a bull market, but they are not bear markets.
With a bear market, there’s usually a series of crashes, continually making lower lows as you feel sick to your stomach, watching value melt away. Those investing with leverage get wiped out so that they have literally nothing left. Altcoins go to zero (or near zero). Investor sentiment hits the point of capitulation where people permanently exit the market.
It takes time to emotionally recover from something like this. The 2013-2017 bear market lasted for 4 years. The 2018 to 2021 bear market lasted for 3 years. Considering the bloodbath happening in markets right now (2022), we might not see a full recovery and the next bull market until 2025 or 2026!
Bear Markets Make Better Memes
To be honest, bear markets are funnier too. Bitcoiners have a nihilistic sense of humor, and when the markets dump, bitcoiners are out there making fun of themselves. With the recent dip, bitcoin evangelist Michael Saylor tweeted a picture of himself working at Mcdonald’s, implying that he lost all his wealth and he’s going to be forced to work a day job in fast food.
Just a day later, Core Lightning developer and head educator at Base 58 @niftynei tweeted out a picture of euphoric Elmo enjoying the crashing and burning of markets, undoubtedly because she wants to stack some cheap sats during the dip. We seem to be holding strong at around $30k at the moment, but anything can happen from here.
Lastly, one of my all time favorite memes comes from @ODELL, which is a short clip of a hunter cooking bear fat over an open fire. Though not explicitly stated in the video, it’s implied that he killed the bear on his hunt, and is now sipping on its delicious fat. All bear markets eventually die because bitcoiners are relentless and will continue to buy bitcoin at any price!
Is Bitcoin Dead?
Without fail, every bear market has the nocoiners taking victory laps, claiming that bitcoin is dead (but for real this time). What’s amazing to me is that from my perspective, it seems that nothing has changed. Sure, some of the the more bullish predictions like nation state and corporate adoption seem less imminent right now due the bearish sentiment, but in terms of what’s going on in Bitcoin Land, everything is exactly the same it was a week ago.
Hodlers are still stacking sats. Miners are still hashing SHA-256. Entrepreneurs are still building bitcoin businesses. Bitcoiners are still buying and selling stuff with bitcoin. The bitcoin ecosystem is still in tact. Bitcoiners are here to stay.
Lastly, I found this tweet thread about bear market narratives that are always proven wrong to be extremely interesting. As someone who’s lived through two bear markets (well, one, plus the current one), I do see some similarities in both mindset and emerging fear narrative.
Some of the most interesting points were as follows:
- bitcoin was a one-time bubble
- this time is different because the whole world was watching
- bitcoin has no strong leadership
- bitcoin underperformed [this specific asset]
- no one will be interested in bitcoin after this crash