Crypto bear market could last another 8 months

  • Grayscale added that long-term investors have the next 250 days of strong accumulation opportunity during the bear market.
  • It also said that the recent market collapse will not be fatal to the industry and would bring robust DeFi projects to the forefront.

The world’s largest digital asset manager Grayscale Investments recently released a report predicting the end of the bear market in crypto. Grayscale compared the current state of crypto to previous bear markets. As per the asset manager, the bear market could last for another 250 days or eight months.

Grayscale notes that the bear and bull periods are cyclical in crypto just like traditional stock markets. As per Grayscale Investments, the crypto market bear cycle lasts 1275 days or four years. The asset manager derived this by dividing Bitcoin’s realized price by the number of Bitcoins currently in circulation.

Grayscale said that BTC’s realized price went under its spot price on June 13, 2022, signaling the start of the bear market. Grayscale notes that this could be the best buying opportunity for investors. Based on historical trends, this is the period of accumulation for long-term investors.

Besides, Grayscale said that the BTC bull run to its all-time high last year was the longest since 2020. It attributes this accelerated growth to the participation of both – retail and institutional investors in the market. The digital asset manager noted:

The 2020 cycle appears to have had a longer run in the ATH range with two prolonged peaks in contrast to the sharp rise and fall in prior cycles. This may have been due to the growing maturity of the crypto market that did not exist in previous cycles.

Failing crypto projects not a big concern

We have seen several crypto projects failing recently, with the major one being the collapse of the Terra ecosystem. The collapse of this decentralized finance (DeFi) project evaporated more than $40 billion of investors’ money within a week.

But Grayscale Investments note that despite the recent collapses and price declines, the industry remains strong. Grayscale notes that the failing crypto projects have not impacted the growth trajectory of Bitcoin (BTC) and the overall market. If further added that Bitcoin’s network remains robust and “operates as designed”.

Grayscale researchers further added that the recent market collapse will not be fatal to the industry. Instead, it could provide another growth opportunity. Matt Maximo, Research Associate & Michael Zhao, Research Analyst- Grayscale Investments wrote:

This market cycle has already provided us with battled-tested DeFi and infrastructure protocols, innovations in scaling solutions, a growing metaverse industry, and more. Despite price declines, liquidations, and volatility, the crypto industry continues to build and innovate, pushing the boundaries of what is possible.

Grayscale has been pushing hard to convert its GBTC product into a spot Bitcoin ETF. However, the SEC rejected its proposal for the spot Bitcoin ETF following which Grayscale initiated legal action against the securities regulator.

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