Bear Market

A bear market is a sustained period of falling prices and depressed sentiment. The term comes from traditional finance and applies to any asset; in Bitcoin it has a recognizable cyclic pattern.

Bitcoin's bear markets, peak to trough on daily closing prices (Coin Metrics):

• 2011 - $29 -> $2.11 (-93%). The first crash, after the Mt. Gox spike.
• 2013-2015 - $1,135 -> $176 (-85%). The Mt. Gox collapse and Silk Road shutdown era.
• 2018 - $19,641 -> $3,185 (-84%). The post-ICO-mania hangover.
• 2022 - $67,542 -> $15,758 (-77%). Terra/Luna collapse, Celsius/Voyager/Genesis bankruptcies, FTX implosion.

The pattern is uncomfortable to live through and bigger in magnitude than nearly any traditional asset. Bitcoin bear markets routinely take 75-93% off the previous cycle's peak.

What's reliably true about bear markets:

• The bottom is never obvious. Every false rally during a bear market looks like the start of recovery. Most of them aren't.
• Capitulation events - exchanges blow up, miners shut down, searches for "Bitcoin is dead" spike - cluster near the actual bottom. Not at random points throughout.
• Leverage cascades amplify the moves. Each cycle's bull run accumulates more leverage (perpetual futures, lending platforms, DeFi); the bear unwind is a Minsky moment where the leverage liquidates faster than fundamentals shift. 2018's $19.6K -> $3.2K and 2022's $67.5K -> $15.8K both fit the pattern.
• The strongest holders accumulate. People who DCA through a bear market end up with a much lower average cost basis than people who only buy in bull markets.
• The protocol doesn't change. Bitcoin keeps producing blocks every ten minutes regardless of what the price is doing. Bear markets are an asset-price phenomenon, not a network phenomenon.

The Bitcoiner discipline during a bear market is simple to say and hard to do. Stop trading. Keep stacking. Build the things you can build when there's no hype to chase.

See Bull Market for the other side and Volatility for the underlying dynamic.

See Rat Poison, Tulips and a Pet Rock for the obituaries written in each bear market, and how many of them the following year proved right.