The entire world’s economy is going through a rough patch right now. Be it NASDAQ, SENSEX, or BITCOIN; everything is down from its all-time highs. While, for short-term investors, it could be challenging to get through this period, long-term ones shouldn’t worry a bit. This is because many analysts say bear cycles are necessary to keep the markets healthy. It also offers more opportunities for profits and growth than a bull market does.
Bear cycles are necessary, so don’t panic!
Bitcoin has been on a downtrend for several weeks now. It is also BTC’s largest streak of weekly red candles showing the extent of this bear market. However, like Elon Musk, many analysts are saying that the bear markets are good. Why? This is because when the bullish sentiment returns, it will lead to phenomenal market gains. A bear market is also good for flushing out weak hands and leverage out of the market. This opens up the price to reach new heights with less manipulation.
Polygon’s co-founder, Mihailo Bjelic, also said that the current bear market was just what the market needed. He also said that the market become a bit reckless or irrational as the total market cap grew by 12.5 times between November 2019 and November 2021. So, a correction at a time like this is good to reset things and continue the journey to new heights.
Another strong benefit that bear markets bring is the disappearance of scams. Since they don’t tend to profit much when markets are down, and activity is less, they go away. This way, every bear market acts as a filter, after which only the solid projects remain during the next bull cycle. And for those who have bought at all-time highs, it can be a good time to dollar-cost average their holdings.
Market bottom
We are already 60% down from the all-time highs of market cap from $3 trillion to $1.2 trillion. While many believe that this is the bottom of the market, a lot of them also think we could go lower. This is considering that most of the time, a bear market brings an 80% correction. Whatever the case is, the markets could soon see a turnaround as Bitcoin has been struck between $28k-$31k for quite a while now.
What are your thoughts as analysts say bear cycles are necessary for healthy markets? And do you think $25k was the bottom of this bear market? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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