Bitcoin: the cryptocurrency that has never been in a bear market

Source: Exame Original Title: Bitcoin: the cryptocurrency that has never been in a bear market Original Link: Emotion affects all of us, as the markets move every day, even if by the end of the day they close at the same place. Whether you are a trader or an investor, you are influenced daily by the market’s erratic movements.

The greater the volatility, the greater the euphoria or fear. The greater the uncertainty, the greater the volatility.

The truth is, this text wouldn’t even need to be long to explain why bitcoin has always been in a bull market, but it does need to be long to show why so many people are losing sight of the fundamentals of their own investments, failing to take a step back and look at the big picture. The image below says more than a thousand words:

Bitcoin in dollars has never been in a bear market and, in fact, has been rising since 2009. The drops may seem significant when viewed from the highs (80%–90%), but even so, they are not enough to characterize it as an asset in a bear market.

How to characterize a bear market

By definition, a bear market is a period of depressed prices because reality has worsened and expectations have too. Reality is expressed in the ways of evaluating an asset, screen price, macro and valuation, and all these vectors converge to the same conclusion: the market pays less because risk has increased and growth has evaporated.

Does this apply to bitcoin? I would say no. Neither the valuation nor the macro provide a basis to support the thesis that bitcoin’s growth is over. On the contrary: its fundamentals and the global economic reality further reinforce bitcoin’s potential.

All the logic that strengthens bitcoin — interoperability, scarcity, and decentralization — makes it a more robust asset than ever. The way the world prints money and how governments often abuse citizens’ wealth only reinforces the cryptocurrency thesis.

Now, the screen price in the short term can really give the impression of the end of the world. In the short term, the bear market is there, but it also expires.

Why are people losing sight of their investments?

Because they forget the fundamentals that justified the initial investment. They forget Bitcoin’s fundamentals and end up contaminated by short-term narratives, by improvised explanations about micro movements spread in the media. They are driven by the fear that “now, for sure, Bitcoin will collapse.”

History shows (in the chart above) that the cycle is clear: expansion and contraction. When Bitcoin sets new highs, it tends to correct sharply. When it accumulates drops between 70% and 90% from the last all-time high, that’s usually a good time to accumulate coins.

How to know if one day bitcoin collapses?

As with any investment, you should get rid of it when the fundamental that justified it no longer exists. If one day the network is breached, if more bitcoins are printed than the protocol allows, or if, for some reason, the asset ceases to be decentralized — then the fundamentals are gone, and the investment should be ended without attachment.

This goes for all asset classes. Until then, whenever the market panics, take a step back. Don’t act on impulse. Remember the fundamentals that made you invest.