Is the crypto bear market over? Indicators suggest it could be

With the bear market finally showing signs of ending, many crypto investors are wondering if now is the right time to start buying digital assets again.

Bear and bull markets are a staple of investing. They are synonymous with business cycles and are an integral part of the markets. A bear market is defined as a decline of 20% or more from recent highs, while a bull market is an advance of 20% or more.

There is no exact science to predict the end of a bear market and the start of a bull market in any investment niche. Until a few days ago, there was little to no upward movement in crypto prices. AAs the market holds today, a number of analysts are saying that the cryptocurrency bear market may have finally come to an end.

Bitcoin, the largest and most well-known cryptocurrency, recently surged more than 8% at the start of the month for the first time since hitting a low of $19,111 on Wednesday July 13. This is a significant development as Bitcoin had been stuck in a stalled price range. Some other altcoins like ETH and ETH Classic also saw above-average gains over the same period.

Although crypto assets have not significantly cleared the resistance levels created during the 2022 bear market (and may not for some time), the cryptocurrency market has regained some much-needed upward momentum. One factor in the recent uptrend is positive news across the global economy: lower oil prices and lower unemployment rates.

Bitcoin’s break above its resistance levels is a positive sign that the market is ready to start rising again. Such improvements lay the groundwork for a more broad-based rally in the crypto market and one that would pave the way for equity and cryptocurrency markets to return to more bullish highs.

If the stock market rebound continues and averts a recession, it is possible that crypto prices will also start to recover. Investors who have been spooked by the sharp drop in asset prices may start to feel more confident to buy again, which could lead to an increase in demand for Bitcoin and other cryptocurrencies.

Economic data boosts stock markets, bitcoin and crypto

Any discussion of the cryptocurrency market and its current behavior is not complete without a parallel discussion of the stock market, since crypto has indeed taken inspiration from stock markets this year. It is therefore not surprising that the latest bearish turn in crypto coincided with a further drop in the stock markets. The S&P 500 is down, the Dow Jones Industrial Average is also down, and the Nasdaq Composite and Russell 2000 are in the red.

Nevertheless, it should be noted that, despite the decline, stocks are still up significantly on the week. So, while there may be some short-term downside pressure, the overall trend for stocks and crypto appears to be positive.

As for what comes next, it will be interesting to see how stocks and Bitcoin react to the latest bearish turn. If stock markets can hold their own, or even rebound, that could bode well for crypto. But if stocks continue to fall, it could put further pressure on Bitcoin and other digital crypto assets.

AI CIO data suggests that BTC price correlation with the S&P 500 and Nasdaq reached 0.59 and 0.82 (respectively) in May 2022, this correlation value approached an all-time high. So just as these two indexes fell in 2022, so did Bitcoin and other cryptocurrencies.

To put it more clearly, the same forces that drove down stock market prices also drove down the prices of crypto assets. But now that stocks have started to rebound, it is possible that crypto prices will follow suit.

Could the stock market avoid a recession?

Recessions are caused by a number of factors, but one of the biggest is a stock market crash. When asset prices fall sharply and quickly, it can trigger a domino effect that leads to business closures, layoffs, and lower consumer spending. The last global recession was precipitated by the collapse of Lehman Brothers and the ensuing financial crisis.

The stock market has been on a rollercoaster ride over the past few months, but is still well above its March lows. If it can continue to hold or even rise, it is possible that a recession can be avoided.

However, there are some signs that the stock market may be able to avoid a crash, although all speculation remains muted. New technical indicators suggest that the global market economy may have turned a corner. Specifically, the technical data indicates that the recession may not be coming, and even if it does, the results should not be as harsh as previously feared.

In light of this data, investors are turning to Bitcoin and other digital assets as a possible safe haven investment. The logic is that if the stock market crashes, Bitcoin will continue to rise in value as people look for alternative investments.

Remaining uncertainty in the crypto market

Combined with technical indicators, all of which say the crypto has already bottomed out, these fundamentals certainly point to a brighter future. Nevertheless, there is still uncertainty in the air. The bear market has taken a toll on crypto investors, with many people losing a lot of money. This should make people more cautious in the future and less likely to invest heavily in digital assets.

Also, it is unclear if the current rally will be sustainable. The bear market has been going on for over a year and we may see another sell off before the bull market really takes off.

Investors should therefore be careful not to put all their eggs in one basket. Diversification is essential and investing in a combination of assets is always the best strategy. Ultimately, the bear market may be over, but it’s too early to tell for sure. Crypto investors should be careful not to invest more than they can afford to lose.

Disclaimer: This article is not financial advice. This is for information only. Always do your own research before investing.

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