If you haven't noticed, market sentiment has been… pretty bad lately.
Bitcoin has declined significantly over the past month, a number of altcoins have seen a much worse decline, leaving many people on Crypto Twitter sharing messages of pessimism. Yet despite the current slowdown, historical trends and underlying movements suggest we are far from the end of this cycle.
Today we dig for hope. Here are five reasons not to lose faith in this cycle and look beyond the current market turmoil.
1️⃣ Prints = Normal
For veterans of the cryptocurrency markets, volatility is a given.
As Bitcoin's fourth 20% correction Over the past 12 months, the current decline does not prove anything unusual from a historical perspective. Surviving multiple declines – ranging from slight declines of 5 to 10% to large drops of 40 to 70% – and not being shaken is a typical experience during a bull market.
Corrections are not only common; they are expected.
2️⃣ Historical timing
At this point, the importance of the Bitcoin halving lies not so much in its impact on supply as in what it implies for the next 12 to 18 months.
The analysis reveals that market bottoms usually occur about 1.3 years before a halving, with peaks after about 1.3 years after, about 480 days.
These declines can be seen as a steady stop on the road to new all-time highs, aligned with the broader cyclical rhythm of Bitcoin's continued ascent.
3️⃣ Long-term pieces in institutions
Now consider the conviction investors need to lock significant capital into tokens with a multi-year time horizon.
Recently, a16z acquired around $90 million of Optimism's OP token with a two-year vesting period, demonstrating strong conviction in the potential of the Superchain. Likewise, institutional funds bought $100 million in locked SOL during the sale of the FTX domain, with conditions locking these tokens for a four-year vesting period. This second round of sales, the first light $1.7 billion worth of SOL sold earlier in March, it features a 15% discount ($95-110) from current market prices (~$130), adding to the significance of the four-year vesting period.
These long-term purchases reflect a strong belief in the direction the market will take in the years to come.
4️⃣ Signals of fear and greed
As a young market that relies primarily on narratives, emotion plays a central role in crypto.
By examining the Fear and Greed Index, we can learn a lot about the direction the market is taking. On the index, 0 equals maximum fear, while 100 equals maximum greed. When the index reached 90 last month, the decline we are experiencing today began. It now sits around 50, neutral territory that historically indicates a bottom is near. On January 24, the index read 48. Over the next month and a half, Bitcoin rose from $39,000 to $73,000. A similar trend occurred last October. The index reached 44 and BTC rose from around $26,000 to $40,000 in the first week of December.
What did Warren Buffett say? To be afraid when others are greedy, and to be greedy when others are afraid?
5️⃣ Government hostility
Ultimately, the U.S. government's war on crypto signals one thing: crypto remains a tool for securing digital rights and freedoms.
Basically, Bitcoin and crypto were created to develop a system for true financial independence. With ~25% of the world's population is unbanked and others running on antiquated rails, blockchains offer a solution not only to accelerate and connect the world's financial systems, but also to truly own and access their wealth from anywhere in the world. Recent crackdowns highlight this power, the old world grappling with it, and demonstrate crypto's ability to preserve financial independence, property, and other fundamental rights.
As we move forward into a fully digital era, the case for crypto enabling digital autonomy only becomes more powerful, extending beyond finance to also include self-custodianship of your data and your online identity.
🙏Hope for the future
Despite current market sentiment, there remain compelling reasons to be bullish on the market.
Bitcoin's resilience through its continued declines, historical rhythms around halvings, long institutions, indications of market sentiment, and the role crypto plays in preserving digital rights clearly demonstrate reasons to remain optimistic.
As these cycles unfold, it may be wise to expect more corrections in the future, but view them as opportunitiesno disadvantages.