Introduction

Bitcoin is one of the most profitable and most popular cryptocurrencies out of all the existing ones. Investors tend to buy Bitcoin and hold on to it for a long time, during a time, often referred to as the Bitcoin Era. Almost all the significant cryptocurrencies have faced a bear market in recent times. However, Bitcoin has been an exception, as it is yet to enter a bear market. A bear market refers to a downward trend in the prices of a currency. It is quite the opposite of a bull market, in which the prices of the currency keep rising. Although Bitcoin prices have fallen way below the highest prices, it is yet to enter a Bear market. We shall analyse available information and discuss why Bitcoin payments is not yet affected by a Bear market.

It is still not below its support level.

Although Bitcoin prices have taken the plunge and are way below the highest price, it is still above $20,000, which was the highest price during the bull run of 2017-18. Another reason behind Bitcoin not entering a bear market is that investors have a positive outlook towards Bitcoin. This has made investors buy and hold more Bitcoins as the price drops. The initial price of Bitcoin in the 1st quarter of 2021 was $29k, and it further grew by 80%, the highest in eight years. This was followed by diminishing prices in the 2nd quarter. However, this was not an indication of a bearish market, as the impact of lowering prices did not affect the rate at which investors were stocking up on Bitcoins.

Why the Bitcoin Bull Run will not be over soon

a. As it was observed in the Bull Run that took place in 2017-18, China started cracking down on cryptocurrency and imposed a ban on it. However, these actions taken by China did not appear to affect Bitcoin prices negatively, as they only grew stronger. Similar actions were taken in China again. However, we cannot believe that the result will be different this time. It is expected that the Bitcoin prices are only going to ascend, and the Bull Run will not be over any time soon.

The institutional support gathered by Bitcoin.

Several institutions, Tesla being the first one, have been supportive of Bitcoin since the start. It was announced by Tesla that the company would start accepting payments in Bitcoin, which created a lot of hype for Bitcoins. In addition to Tesla, Grayscale, PayPal and Square have also started accepting crypto payments in the form of Bitcoin. Banks are also catching up to the trend as Morgan Stanley has started allowing Bitcoin trading. Many countries are passing laws in favor of Bitcoin and setting up institutions for encouraging the growth of the crypto industry. In addition to the laws and regulations, Canada has set up an Exchange-traded fund that focuses on Bitcoins. El Salvador has indicated that it will accept Bitcoins as legal tender. Thus, it is safe to say that a Bear market is far from affecting Bitcoin prices, owing to the endorsements it has received from the institutions mentioned above, if not more. 

Other factors that explain why Bitcoin is not affected by a bear market yet

It was published in various reports that 30% of the total American currency that exists in circulation was printed in 2021. This indicates upcoming inflation, which would mean the degradation of the value of the American dollar. Investors recognize the potential hedging capability of cryptocurrencies. This has thwarted the value of Bitcoin in the market even during severe market slumps.

A bear market is the opposite of a bull market, in which crypto prices keep falling. A bear run comes directly after a bull run and is inevitable in most cases. However, during the recent crypto market crash, it was observed that Bitcoin had not entered a bear market yet. Some of the factors behind Bitcoin staying out of the bear market include its current prices, which are still above its support level of $20,000. The support received by institutions like Morgan Stanley, PayPal and Tesla, and many others during the Bitcoin Era has ensured that Bitcoin stays out of a Bearish market. However, experts have predicted that Bitcoin is not going to enter a Bull market before the final half of 2024. 

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By SARAH