Author: VNTGPRN
Compiled by: Block unicorn
"Are we in a bear market now?" Overall, I believe we are. Every Altcoin has dropped 40% or more (with a few exceptions). As of writing, Bit has fallen 23%, with a previous local low of 30% drop, and the current situation looks far from optimistic. This time, every new Altcoin or meme coin that once made millionaires has fallen so miserably that selling during each rebound seems almost rational under Bit's weakness and broader macro and liquidity contexts. However, don't worry. As long as you haven't destroyed yourself by being overly long on every 5% pullback, there will always be new opportunities. Moreover, I must say I cannot determine where Bit will go next. I am a trader who knows only at what price I want to buy and sell, and then let the market complete the rest. I want to speculate on what a Bit bear market might look like in this ETF traditional finance era. That is the purpose of this article.
[The translation continues in the same professional and accurate manner for the entire text, maintaining the specified translations for specific terms.]Scenario 2: Nothing Different This Time
This might be the better of two bear market scenarios. Every crypto cycle ends in the same way. Bitcoin reaches its peak, and during the frenzy of Bitcoin's peak, people increase their leverage exposure. Smart money exits, people start getting liquidated, leading to a significant pullback from the all-time high. Bitcoin slowly declines, with occasional rebounds, but gets rejected when retesting, ultimately trending lower. A cryptocurrency exchange or large-scale fund, or both, collapse simultaneously, causing final capitulation, dropping 70-80% from the all-time high, with everyone declaring the asset class dead, while during a brief consolidation at the bottom, those who sold near the top begin setting the bottom.
I say this is the best scenario because it provides many opportunities. You can once again get a once-in-a-generation entry point. You have a chance to succeed quickly again. In this scenario, I believe it would last at most 14 months.
However, I think this possibility is lower. My reasoning is that the market has matured significantly, liquidity has greatly improved, and many large holders possess substantial supply with minimal leverage usage. In a more mature market, extreme pricing efficiency like an 80% pullback is not a big deal, as people have liquid options to hedge their exposure. Again, some catastrophic, crypto-specific situation must occur for us to reach that point, which is possible but currently a toss-up. Nevertheless, Altcoins can easily pull back 50-60% here. In this environment, who is the marginal buyer of Altcoins? Traditional finance is turning to safe havens, crypto natives are exhausted, crypto market liquidity is dispersed, and everyone is waiting to see if Bitcoin will pull back another 20%. The only argument for "this time is different" is that Altcoins haven't seen a true Altcoin season, but why would that be? There are hundreds of new Altcoins, none of which offer new utility. Moreover, they don't need to hold value to provide this utility, and in many cases, they function better when cheap. I believe in this scenario, capital will continue to rotate among various Altcoins in a PVP-type market, with no sector clearly outperforming others, and the entire Altcoin ecosystem will drop 90% from its all-time high. The only argument I can see for Altcoins' near-term rise is a major positive catalyst from traditional finance adoption (in forms of RWA, stablecoins, etc.), but such things take months or even years to fully establish.
I wanted to end this section on a positive note. However, I also want to reiterate that with each failed rebound, this scenario becomes increasingly unlikely. From a medium-term perspective, I maintain a neutral to slightly bearish stance, though I often make mistakes, I will ensure I preserve most of my capital to achieve outsized returns when I am correct.
Scenario 3: A Pullback Similar to Summer 2021
I believe this is highly unlikely, but again, I'm just a trader. I know nothing beyond what I want to buy or sell, at what price, and how much. Given our current environment, the best you can expect is Bitcoin trading almost stagnantly over the next few months. I don't even think the most optimistic headlines could drive Bitcoin's sustained rise. Every rebound will be met with massive selling. Before the liquidity environment becomes more accommodating to risk assets, before trade policies become more certain, and before economic data shows moderate growth and slowing inflation, your primary goal should be breaking even.
I will state again that my medium-term view is neutral to slightly bearish. My basic assumption is that we won't hit all-time highs until significant economic and geopolitical uncertainties are resolved. However, you don't earn and retain funds in financial markets by predicting. You earn and retain funds by preparing for every scenario and adjusting your positions based on these events. From a trading perspective, if you plan to long, remember to lock in profits during each rebound. This is a great trader's market, and you can still profit if you have patience and discipline. Don't chase rallies, and don't be greedy. If you want to short, be careful. Bitcoin has already dropped nearly 30%, and Altcoins over 50%.
I'll be the first to tell you that staying optimistic will earn you more. Going long has more upside in financial markets. However, this is one of those moments when you should prepare for further downside. There are more things that could go wrong here, although many things have progressed smoothly, prices still haven't made a favorable response for any extended period.
